IBS Enterprise Help Centre 9.0Business Suite 2016

About IBS IFRS

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Purpose

To enhance the efficiency and liquidity of Europe's capital markets, the European Commission decided that all listed enterprises within the EU should convert their consolidated financial reporting to IFRS (International Financial Reporting Standards). This should have been completed by 2005.

Background information

There is also a possibility that some EU member states may eventually extend the IFRS requirements to unlisted companies, particularly in regulated sectors such as banking and insurance, and to the individual financial statements. Even if IFRS will not be mandatory for many unlisted companies, IFRS is expected to be a standard that will be widely adopted.

European wide use of IFRS will improve transparency, comparability between and scrutiny of quoted companies. Therefore, it is hoped that raising capital within the EU will become a cheaper and more competitive process in relation to other global markets, especially the US.

IFRS definition

According to IFRS, corporations shall provide information about the different parts (i.e., segments) of their business. These segments shall encompass both business areas and geographical areas. A business area is an identifiable part of a company that supplies goods and services and is exposed to risks and opportunities different from those in other business areas. In the same way, a geographical area is a separate geographical area exposed to risks and opportunities different from those in other areas. For a geographical area, the corporation has a choice to base the segmentation on:

  • Where the corporation's production sites or other sites are located, or
  • Where the customers and the markets are located

The corporation shall decide whether the business area or the geographical area should be the primary segment. Criteria for this choice are which risks and opportunities that dominate. If the business area is chosen as primary, geographical area should be the secondary segment and vice versa.

For each primary segment the corporation shall, in its financial reporting, provide information about, e.g.:

  • revenues from external customers
  • revenues from transactions with other segments
  • profit/loss
  • assets value
  • liabilities value
  • investments in tangible and intangible fixed assets
  • depreciations
  • substantial costs, other than depreciations, without outgoing payments

For each secondary segment the corporation shall, in its financial reporting, provide information about, e.g.:

  • revenues from external customers
  • assets value
  • investments in tangible and intangible fixed assets

IBS Enterprise solution

Prerequisites
IBS Financials must be installed and activated.
The IFRS function must be activated in the Function control file.

To be able to manage a complete IFRS reporting the enhancements in IBS Enterprise are as follows:

  1. Segmentation. The possibility to split the A/R and A/P balances into required business and geographical areas.
  2. Asset management. Handling of new IFRS depreciation base when converting to IFRS.
  3. Periodical stock valuation report - if required.

Run time considerations

If there are large volumes of open documents (millions) to be segmented, it may be advisable to divide the segmentation into more than one job run. For example, select a range of suppliers in one run and some other suppliers in another run and so on.

The elapse time is, as usual, dependent on equipment, job priority, workload, etc.

Note: Setting Print details to YES in the Segmentation routine produces an extensive listing and should therefore be chosen only when required.

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