Maliti. State of IFRS in Namibia. PowerPoint.pdf - Polytechnic of ...

STATE OF IFRS INNAMIBIABYPAUL N MALITI(BA, FCCA)Head of DepartmentACCOUNTING AND FINANCEPOLYTECHNIC OF NAMIBIAIFRS NAMIBIA 2009 1

ABBREVIATIONS GAAP – generally acceptedaccounting practices IAS – international accountingstandards IFRS – international financialreporting standards ICAN – Institute of CharteredAccountants - Namibia PON – Polytechnic of NamibiaIFRS NAMIBIA 2009 2

RESEARCH PROBLEMSIFRS not appropriate for:• Small national economies• Small entitiesIFRS expensive venture especially for:• Small entities• Local entitiesIFRS no value addition• Only for general-purpose financial statementsIFRS NAMIBIA 2009 3

OBJECTIVESTo establish: Reasons for non-adoption / compliance Technical problems with IFRS adoption /compliance Benefits, if anyIFRS NAMIBIA 2009 4

GAAP What is GAAP? Mandatory sources:• National laws Companies Act, Close Corporation Act,Credit Agreements Act• National accounting standards ICAN• Local stock exchange requirements Namibia Stock ExchangeIFRS NAMIBIA 2009 5

GAAPNon-mandatory sources:• International accounting standards• Foreign statutory requirements Subsidiaries of multi-national corporationsIFRS NAMIBIA 2009 6

ACCOUNTING FRAMEWORKMeasurement• Choice of accounting methods, e.g.DepreciationInventory valuationRecognition• Journals (daybooks)• LedgersDisclosure• Financial statements• Other financial reportsIFRS NAMIBIA 2009 7

FAITHFUL REPRESENTATIONTrue and fair view• Underlying assumptionsGoing concernAccrualsPrudenceConsistency• Qualitative characteristicsUnderstandabilityRelevanceMaterialityReliabilityAccuracyNeutralityTimelinessIFRS NAMIBIA 2009 8

PURPOSE OF FRAMEWORK Development of future IFRS Harmonisation National standard setting Assist accountants & auditors Assist users of financial statementsIFRS NAMIBIA 2009 9

GENERAL-PURPOSE FINANCIALSTATEMENTS Financial position statement Performance statement Statement of changes in financialposition Statement of changes in equity Disclosure of accounting policiesIFRS NAMIBIA 2009 10

COMPLIANCE WITH IFRSEnsures fair presentation: Disclosure of compliance with IFRS Compliance relates to all IFRS Disclosure is no rectification forinappropriate accounting policiesIFRS NAMIBIA 2009 11

DEPARTURE FROM IFRS Requires justification bymanagement Departure necessary for fairpresentation Details of such departure Financial effect of such departureIFRS NAMIBIA 2009 12

STUDENT RESERACHAn investigation on financial reporting & adoptionof IFRS in NamibiaThe application of IAS/IFRS by private companiesin NamibiaAn investigation into the adoption of IAS bycommercial banks in NamibiaInvestigative study on the degree to which FNBapplies IAS/IFRS with regard to group financialstatementsIFRS NAMIBIA 2009 13

RESEARCH FINDINGSNamibian financial statements compliantwith IAS/IFRSIAS/IFRS adds valueAudit opinion confirming compliance withIAS/IFRSQualified opinion for departure or non-complianceIAS/IFRS facilitates understability &comparisonAll IAS/IFRS adopted except non-relevantstandardsIFRS NAMIBIA 2009 14

RESEARCH FINDINGSProblems:Lack of qualified accountants – veryexpensiveUnfair presentation if IAS/IFRS notcomplied withNeed for separate IAS/IFRS for smallcompaniesFair valuation of assets and liabilities:• Measurement• RecognitionIFRS NAMIBIA 2009 15

CONCLUSION Namibia alive to IAS/IFRS IAS/IFRS adds value (usefulness) Users of financial statementsappreciate IAS/IFRS IAS/IFRS should apply to allcompanies Cost inevitable & justifiableIFRS NAMIBIA 2009 16

ACKNOWLEDGEMENTS Respondents to our students’research questionnaires &interviews:• Companies• Audit firms• Individuals Polytechnic studentsIFRS NAMIBIA 2009 17