064 Preparation for financial reporting and roles of accounting policies
Accounting policies are the ones that companies require to prepare, according to IFRS’s principle-basis accounting, in order to detail accounting policies that companies adopt. It is very important to prepare accounting policies so that they could achieve a quality financial reporting system and effective work process.
If each subsidiary and affiliated company submits financial reports to a parent company in the way they prefer, it would become very complicated for the parent company to compile the financial reports into one. Nonetheless, IFRS requires them to make the same accounting treatments against the same transactions within the same group. Then, the accounting policies come to attention. This makes the communication of information smoother and enables standardization of work flows of accounting or financial. Since the intranet system and method of collecting information within the group will be also based on accounting policies, not only financial reporting system but also internal control will be well prepared.
It is true that introducing accounting policies would give companies heavy burden. But, they could think that this is the best moment to review the group control of companies, and we think they should.
