IFRS Conformity to Enhance Banks’ International Role

Conforming to International Financial Reporting Standards will have immediate positive implications for attracting foreign investments and help Iranian banks on the international scene, believes an accounting expert.

“IFRS plays a very important role in creating transparency and in the current state of the Iranian economy, wherein we feel a dire need to attract foreign investment, the formation of a common accounting language would elevate Iranian companies’ status in the global community and change the atmosphere of distrust against the country,” IBENA quoted Gholamreza Salami, a member of the Iranian Institute of Certified Accountants, as saying.

He referred to other advantages of the standards, saying they are very important for the country’s international banking transactions in that “they pave the way for attracting foreign capital through banking channels”.

The Central Bank of Iran is seriously pursuing the complete implementation of IFRS and other international banking requirements such as Basel guidelines. The bank has notified the new financial methodology using the IFRS format and banks’ financial statements will be based on it in the current fiscal year (ending March 20).

The senior accountant also emphasized that drafting financial statements based on IFRS is not sufficient and must be coupled with complementary policies in order to come to fruition.

“One of these policies pertains to drafting financial statements for the board members of the banks,” says Salami, noting that such statements are currently lacking and must be made more detailed and comprehensive.

Kourosh Parvizian, the head of the Association of Private Banks, believes that supervisory bodies must be obliged to coordinate and “adopt a unified approach” to publish the information required as part of IFRS.

“These new standards are expected to help create stability and sustainability in banks and credit institutions, instill transparency and create more trust among beneficiaries and shareholders, depositors and bank and credit institution’s staff,” he said.

Parvizian, who is also the CEO of Bank Parsian, added that conforming to international standards is not a point of dispute among officials, “but what is divisive is the timing of the implementation of the standards and their localization and instruction,” referring to recent complaints from some bankers  that the new financial statements have hurt their profit.

 IFRS are a single set of accounting standards, developed and maintained by the International Accounting Standards Board for application on a globally consistent basis—by developed, emerging and developing economies.

These standards help provide investors and other users of financial statements with the ability to compare the financial performance of publicly listed companies on a like-for-like basis with their international peers.

IFRS are now mandated for use by more than 100 countries, including the European Union and by more than two-thirds of G20 states.