THE IMPACT OF THE USE OF IFRS NO. (13) (FAIR VALUE) ON THE RELEVANCE AND INFORMATIVENESS OF FINANCIAL STATEMENTS IN FINANCIAL INSTITUTIONS

The article discusses the impact of implementing (IFRS) No. (13) on the importance of financial statements in financial institutions, given the rapid and increasing development of commercial markets and the exchange of interests between related parties. Fair value accounting has become the preferred alternative to avoid the drawbacks of the historical cost principle. Despite the benefits of using fair value, it has also been subject to numerous criticisms, the most important of which is that using any level other than Level 1 in measuring fair value in Standard No. 13 may allow management to exhibit bias in order to manipulate profits or capital for personal gain, as these estimates are difficult for auditors to verify. The author concludes that there is a need to justify the process of choosing the approach by which fair value is measured and estimated, because disclosure requirements have expanded to include justification for using one approach rather than another, as well as the assumptions used in the valuation to limit subjective judgments.