International Accounting Standards: Principles and Financial Reporting

Objectives of International Accounting Standards

• Reflect the economic substance of business transactions.
• Present an accurate picture of the financial situation of a business.
• Unify accounting policies among European Union member countries.

Approval in Peru

• Council of Deans of the Colleges of Public Accountants of Peru: The most representative body.
• Accounting Standards Board: Agency participating in the National Accounting System.

Purpose of Financial Statements (EEFF)

Provide information on the financial situation (assets and liabilities), financial performance (revenues and expenses), and cash flows.

Components of Financial Statements

• Balance Sheet
• Statement of Profit and Loss
• Statement of Changes in Equity
• Cash Flow Statement
• Notes to the Financial Statements

Elements of Financial Performance

• Assets: Resources controlled by the company.
• Liabilities: Present obligations of the company.
• Equity: Residual interest in the assets of the company after deducting all liabilities.

Objective of IAS 1

Establish the basis for the presentation of general-purpose financial statements to ensure comparability, both with the entity's financial statements of previous periods and with those of other entities.

Key Assumptions for Financial Presentation

• Going Concern: The assumption that a company will continue its activities in the foreseeable future.
• Accrual Basis: Operations must be recorded when the economic event occurs, regardless of cash movement.

Qualitative Characteristics of Financial Statements

• Compliance with established standards.
• Clear identification of the company name.
• Reporting period and date.
• Currency used.
• Specific explanatory notes.

Examples of Business Activities

• Operating Activities: Purchase of merchandise, payment of invoices, and IGV (VAT) processing.
• Investment Activities: Purchase of computers, company equipment, or shares on the stock market.
• Financing Activities: Providing credit to partners, personal loans, or credit to other companies.