IFRS, Fair Value and Corporate Governance

The Impact on Budgets, Balance Sheets and Management Accounts


  • Dimitris Chorafas, Independent Finance Consultant, France

Written for managers and professionals in business and industry, this book helps the reader in: * Understanding what is and is not IFRS * Learning the complexities of IFRS implementation* Appreciating the contribution of IFRS to corporate governance The changeover from the mosaic of different heterogeneous national accounting standards to the International Financial Reporting Standards has not been easy. For many companies IFRS, and most particularly the concept of fair value in IAS 39, has amounted to a phase shift – which is prerequisite to achieving compliant financial reporting. The research conducted by Dr. Chorafas for this book, documented that the process of meeting IFRS requirements presents opportunities and challenges to all enterprises. As many companies have found out, abandoning the classical accruals accounting for marking-to-market their transactions and portfolio positions, has not been easy. The conversion process has affected several functions within the organization including balance sheets, P&L statements, auditing, risk control, information systems, and management accounting. This book is in made up of four parts: * Part One focuses on business competition, standards boards, corporate accounting, and IAS 39 * The theme of Part Two, is the implementation of IFRS, exemplified through case studies on task forces and practical applications * Part Three brings together IFRS and management accounting requirements, with emphasis on fair value. * Part Four addresses itself to the contribution IFRS can make to better corporate governance, and to rebuilding the balance sheet The book has many case studies based on actual experiences. These range from the implementation of IFRS directives such as hedge accounting, to developing practices of real-time balance sheets; the help provided by sophisticated accounting solutions help in stress testing; and a comprehensive definition of the role of the audit committee.
View full description


Management Accountants; Chief Executive Officers; Chief Operating Officers; Chief Financial Officers; Financial Directors; Budget Directors; Auditors (internal and external); Operations Managers; Information technology officers and their staff


Book information

  • Published: February 2006
  • ISBN: 978-0-7506-6895-8

Table of Contents

PART ONE BUSINESS COMPETITION, STANDARDS BOARDS, AND CORPORATE ACCOUNTING: Chapter 1 NEW RULES OF COMPETITION AND ACCOUNTING STANDARDS; Chapter 2INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB) AND CORPORATE GOVERNANCE; Chapter 3 DYNAMICS OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS); Chapter 4 THE CONTROVERSY OVER IAS 39; Chapter 5IAS 39 AND THE RECOGNITION OF DERIVATIVES RISK. PART TWO IMPLEMENTING IFRS: Chapter 6 PROJECT MANAGEMENT FOR IMPLEMENTATION OF IFRS; Chapter 7 AN IFRS TASK FORCE CASE STUDY. TOP MANAGEMENT'S RESPONSIBILITY FOR FAIR VALUE ACCOUNTING. PART THREE MANAGEMENT ACCOUNTING AND THE BUDGET: Chapter 8 MANAGEMENT ACCOUNTING AND CORPORATE GOVERNANCE; Chapter 9 BUDGETING. A CASE STUDY ON FINANCIAL PLANNING; Chapter 10 VALUING ASSETS. THE CHALLENGE OF BEING "RIGHT"; Chapter 11 BUSINESS ETHICS ADD VALUE TO FINANCIAL DISCLOSURES; Chapter 12 FORWARD LOOKING STATEMENTS, MODELS, EARNINGS, AND GOODWILL. PART FOUR CORPORATE GOVERNANCE AND THE BALANCE SHEET: Chapter 13 BALANCE SHEETS AND INCOME STATEMENTS AS MANAGEMENT TOOLS; Chapter 14ECONOMIC CAPITAL IS AT BOTH SIDES OF THE BALANCE SHEET; Chapter 15 THE REAL-TIME MANAGEMENT REPORT; Chapter 16 INTERNAL CONTROL, STRESS TESTING, AND EFFECTIVE RISK MANAGEMENT; Chapter 17 ROLE OF THE AUDIT COMMITTEE.The book divides into four parts.Part One: addresses the fundamentals of management accounting as contrasted to regulatory accounting procedures and financial reporting by public companies.This text is the product of personal experience, and much experimentation at major companies, in efforts to determine how their managers can best understand the firms vital accounting figures, and how company goals can be met in a cost/effective manner.The text explains the function of management accounting and of internal management accounting information systems – (IAMIS).It emphasizes the benefits from accumulation and communication of financial data concerning the entity's economic activity. This notion includes:*The budget which is a financial plan, and*Budgetary control to assure that planned and financed activities are executed in the intended manner.Part Two: focuses on the concept and practice of experimentation through simulation.First, it defines financial modeling – its nature and its role. Then it demonstrates how and why financial modeling is concerned with the translation of business events into the language of decision-makers.This presentation is enriched with a lot of comprehensive case studies.The theme of Part Three is the organizational prerequisite for successful development, implementation and use of financial models – within the management accounting and budgeting perspective. Organizations are made of people and, as this book demonstrates, their motivation is crucial in obtaining commendable results. People are assisted through technology. Therefore, the book outlines the necessary technological infrastructure, and, by means of practical examples, it explains how it can be used effectively.