Transformation of financial reporting
Transformation of financial reporting is a process of preparation of reporting in accordance with IFRS by reorganization of accounting information and adjustment of positions of reporting prepared according to the rules of Accounting Regulations (Standards).
Law of Ukraine “On Accounting and Financial Reporting in Ukraine” provides compulsory preparation by public joint stock companies, banks and insurers, as well as enterprises that conduct business activities by types specified by the Cabinet of Ministers of Ukraine, of financial reporting and consolidated financial statements in accordance with IFRS. At the same time, the transparency and openness of financial reporting in accordance with IFRS facilitates the enterprise access to international capital markets, aids inflow of investments and increases the quality and efficiency of financial transactions.
For transformation of the reporting according to IFRS one may use ready-made reporting under the Accounting Regulations (Standards) and analytical breakdown to it according to the items of balance and profit and loss statement. It is performed by making appropriate adjustments and additional entries in order to bring assets, liabilities and capital to the amount, by which they should be reported under IFRS.
Unified methods for transformation of Ukrainian reporting into the reporting that complies with IFRS, do not exist. In each separate case, it is influenced by the specific nature of financial and economic activities, special aspects of organization of the accounting and accounting policy, availability of time, financial resources and personnel qualified in this field.
Advantages of use of the transformation method are short time and low financial expenditures, simplicity of the procedure execution, clarity of adjusting entries.