StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

IFRS effects on banking - Term Paper Example

Cite this document
Summary
The transition of the Generally Accepted Accounting Principles to the International Financial Reporting Standards has raised many questions for the accounting world of the US. As it has affected almost all the industries in the US, it has largely affected the banking industry in…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.2% of users find it useful
IFRS effects on banking
Read Text Preview

Extract of sample "IFRS effects on banking"

Effects of IFRS on the U.S. banking industry IFRS Conversion Contents Contents 2 Effects of IFRS on the U.S. banking industry 3 Presentation and disclosures: 3Consolidation requirements: 3Financial instruments: 4Affect of lease accounting: 4Process and system of the company: 4Works Cited 5Effects of IFRS on the U.S. banking industry The transition of the Generally Accepted Accounting Principles to the International Financial Reporting Standards has raised many questions for the accounting world of the US.

As it has affected almost all the industries in the US, it has largely affected the banking industry in many ways.Presentation and disclosures: The foremost affect of the use of IFRS instead of GAAP will affect the general presentation of the financial statements as the requirements differ from each other. Many variations are possible as the IFRS gives a wide range of choices for the presentation and disclosure of the financial data and the banking company will have to decide carefully regarding the presentation and disclosure so as to keep consistent with other companies.

Specifically, disclosures of financial instruments mentioned in the IFRS will have to be given extensive attention to comply with the requirements of the IFRS.Consolidation requirements: The consolidation requirements of the IFRS require that the statement mentions all the subsidiaries of the company. Special Purpose Entities (SPE) are formed by banks in order to secure loans, influence the leasing transactions and plan the investments and banks are at times form a part in the SPEs which are not included in the consolidated statements, the IFRS may require consolidation to those SPEs as well.

(International, 2011)Financial instruments: The accounting based on the financial instruments, which an integral part of the banking industry, is also affected as the classification and measurement of the financial instruments is complex with respect to both the standards. (Young, 2011) The measurement of impairment of the financial instruments also involves complexity when a company transits from GAAP to IFRS. The methods of impairment as well as the recognition will also be affected with the use of IFRS in the company.

Affect of lease accounting: The accounting criteria of IFRS for leases is different from that of GAAP and the IFRS requires more lease transactions to be recognized in the accounts of an entity as compared to those required by GAAP. The banks will be greatly affected who do not recognise the operating leases on their balance sheets when the substance of the lease transaction is that the bank has all the rewards and risk transferred to it.Process and system of the company: The adoption of IFRS by a banking sector company will require an additional amount of effort in order to comply with the requirements of the IFRS.

Some premeditated decisions will be needed to be taken to avoid any additional or incremental costs for the transformation. (IAS Plus) The transformation will be dependent on the base of the entity and the systems that are being used by the banking company such as the ERP or other customized systems.Works CitedIAS Plus. (n.d.). Retrieved April 2011, from www.iasplus.com/dttpubs/0811ifrsbanking.pdfInternational, K. (2011). Impact of IFRS: Banking. KPMG .Young, E. a. (2011). Effects of IFRS on the U.S. banking industry.KPMG .

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“IFRS effects on banking Term Paper Example | Topics and Well Written Essays - 500 words”, n.d.)
IFRS effects on banking Term Paper Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/miscellaneous/1576781-ifrs-effects-on-banking
(IFRS Effects on Banking Term Paper Example | Topics and Well Written Essays - 500 Words)
IFRS Effects on Banking Term Paper Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/miscellaneous/1576781-ifrs-effects-on-banking.
“IFRS Effects on Banking Term Paper Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/miscellaneous/1576781-ifrs-effects-on-banking.
  • Cited: 0 times

CHECK THESE SAMPLES OF IFRS effects on banking

Account standardization, IFRS and US GAAP

Account standardization, ifrs and US GAAP.... International Financial Reporting Standards (ifrs) are accounting principles and standards formulated by the International Accounting Standard Board (IASB) which is situated in London.... A financial report of high and genuine quality improves their understanding and makes them better informed and also reduces their risk of trading (Beke, 2011) 3) ifrs helps in eliminating most of the financial adjustments that the financial analyst have made historically in order to make the company financial statements comparable internationally (Beke, 2011) 4) ifrs provides reduced information costs and information risk to potential investors (Beke, 2011)....
9 Pages (2250 words) Essay

Differential Reporting in Australia

hellip; For the proposed change the AASB has taken the 'International Financial Reporting Standard (ifrs) for SME Project' proposed by the International Accounting Standard Board (IASB) as the base model.... The AASB has made an Invitation To Comment (ITC) 12 for the proposed changes it would like to bring in the 'Differential Reporting Regime for Australia and IASB Exposure Draft of A Proposed ifrs for Small and Medium-sized Entities'....
20 Pages (5000 words) Essay

The Prevalence of Creative Accounting in the Corporate World

The first hypothesis is that the prevalence of creative accounting is a result of the deficiencies in the legal systems for banking and accounting.... .... ithout moving away from laws or accounting requirements, allowing to the managers to change the financial result or the financial statements....
17 Pages (4250 words) Essay

Financial Reporting Standards

The world of finance and accounting is not different with respect to the levels of standardization and expectation that exists within the world of… For instance, the IASB (international accounting standards board) was formed out of a desire to create an independent accounting standard that can be utilized as a baseline of understanding for the way in which financial transactions and accounting for these can be Delving back even further into history, the ifrs (international financial reporting standards) were implemented as a means of providing a common language and level of expectation that stakeholders, and business leaders, could utilize as a means of understanding common practices and measurements that were suited for widespread representation of asset and liability representation....
4 Pages (1000 words) Essay

Vision and Mission of Julphar Pharmaceuticals

This means that the entity should faithfully represent the effects of the transactions, events and condition in accordance with the criteria of assets, liabilities, income and expenses as mentioned in the framework.... It manufactures and distributes the several brands of healthcare products....
8 Pages (2000 words) Essay

Does Quantitative Easing Policy in US Affect Market Liquidity

To quantify the effects of TIPS purchases on the functions the market and the related market for inflation swaps, there is use of sum of TIPS and inflation swap liquidity premiums (Lessambo, 2013).... The stated goals and nature of quantitative easing earlier focused on efficacy making the program to be understandable and necessary (Kaminska & Zinna, 2014)....
4 Pages (1000 words) Research Proposal

The Financial Statement of Barclays Bank Plc

hellip;  Barclays Bank Plc is one of the prominent global banks in the industry dealing in retail, commercial and Investment banking.... nbsp; As per the financial statement of Barclays Bank Plc, the bank has been divided into ten major segments which are UK Retail banking, Barclays Commercial Bank, Barclays Card, Global Retail and Commercial banking – Western Europe, Emerging Markets and Absa, Barclays Capital, Barclays Global Investors, Barclays Wealth and Head office functions and other operations....
6 Pages (1500 words) Case Study

Financial Regulation of Netherland Bank

This bank tax applied to all the financial organizations that held a banking license.... Looking at the bank tax in-depth, it aimed at ensuring that the banking sector added to the costs that the Dutch government incurred in supporting the same sector.... As the paper outlines, financial regulation can be termed as the real rules that are written down to state how a certain finance aspect shall be carried out....
10 Pages (2500 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us