Tips for doing Audit of Financial Statements under IFRS
International Financial Reporting Standards
International Financial Reporting Standards (IFRS Standards) is a single set of auditing standards, developed and maintained by the International Accounting Standards Board (the Board) with the intention of those standards being capable of being applied on a globally consistent basis—by developed, emerging and developing economies.
Components of IFRS Standards
Incorporating Illustrative disclosures and a companion Disclosure checklist – help you to prepare interim financial statements under IFRS Standards. They are compliance-focused and have two components:
- Illustrative disclosures that illustrate one possible format for financial statements prepared under IFRS, based on a fictitious multinational corporation; and
- A companion Disclosure checklist, which identifies the disclosures required for auditing services.
The IFRS provides auditing standards for its members. This promotes quality and consistent among the members.
Checklist for Audit of Financial Statements Under IFRS:
- Ensure you comply with new and existing agreements and/or amendments enacted during the year including operating agreements, lease agreements, and debt agreements. The auditor will review these agreements will be reviewed by your auditor during fieldwork audit procedures and will be utilized to prepare the footnotes to your financial statements under IFRS.
- Reconcile all bookkeeping accounts including but not limited to cash, accounts receivable, inventory, accounts payable, and accrued expenses. This reconciliation forms a basis in financial statement preparation. You may require professional auditing services with IFRS background experience.
- Gather and compile a detail of all related party transactions including sales, purchase, and leases. During auditing, the IFRS requires a complete financial accounting documentation
- Ensure you comply with the IFRS auditing standards and regulations. Include the capitalization policy in your internal audits for consistency.
- Reconcile changes in equity accounts including new equity agreements and/or amendments to existing agreements. The Financial statements under IFRS Act require these accounts, as they are part of financial transactions in the fiscal year.
- Prior to the auditing, make sure all items on the IFRS checklist are prepared. The items are dependent on the type and size of the firm.
- Ensure the Property, Plant, and Equipment (PP&E) schedules are up-to-date. Be sure your PP&E summary includes dates, amounts, and detailed descriptions of all assets purchased and sold during the fiscal year.
IFRS standards are a common global language for business affairs so that company accounts have a common audit basis. The standards cover all areas of a firm and it requires professional auditing services to ensure full compliance. Proper bookkeeping is vital to a successful IFRS audit.