International Financial Reporting Standards (IFRS)
What is IFRS?
International Financial Reporting Standards (IFRS) are set of standard rules and regulations introduced by the International Accounting Standards Board (IASB). The main objective behind the introduction of IFRS was to increase consistency, transparency and comparability of financial statements around the globe.
What is IASB?
IASB or International Accounting Standards Board is a London based autonomous body that came into existence in 2001 with the aim of developing the International Financial Reporting Standards (IFRS). IASB replaced the International Accounting Standards Committee (IASC) that was previously given the responsibility to establish international accounting standards (IAS). In 2010, IASB announced the Conceptual Framework for Financial Reporting to provide a basic understanding of accounting practices under IFRS.
Advantages of IFRS
Here are some of the major benefits of IFRS:
- Widely accepted: Financial statements created as per IFRS are widely accepted as IFRS are adopted by 144 jurisdictions out of 166.
- Comparability: As IFRS are set of rules that are widely accepted so it helps an individual to compare different companies of different nations following IFRS can be easily compared.
- Extended Guidance: IFRS gives guidance relating to the applicability of various principles given in standards as per the situation.
- Amendment in standards: In a case, if there are changes in the economy, IFRS can be amended according to such economic changes.
IFRS Standard Components
The scope of IFRS covers a broad range of accounting practices. IFRS set compulsory rules for some business practices such as
- Balance sheet or financial position statements: IFRS impact the manner according to which the components of a balance sheet are reported.
- Statement of Profit and loss or Income or expenditure statement: The parts of such statement are influenced as per the set of rules set by IFRS.
- Cash flow statement: This report shows the operating, financial and investing activities of the company in the given period.
A company shall also provide its accounting policies summary along with the above-mentioned financial statements. The reports formed are compared with the preceding report to analyze the changes to make the necessary decision.
List of IFRS and IAS
Before IFRS, IASC had already issued International Accounting Standards (IAS) that was introduced between 1973 and 2001. Here is the list of IAS and the IFRS as they both are applicable in the current scenario:
International Financial Reporting Standards for first adoption of IFRS
International Financial Reporting Standards relating to share based payments
International Financial Reporting Standards regarding business combination
International Financial Reporting Standards for insurance contract
International Financial Reporting Standards relating to non-current assets held for sale and discontinue operation
International Financial Reporting Standards regarding exploration and evaluation of mineral resources
International Financial Reporting Standards for disclosure of financial instruments
International Financial Reporting Standards regarding operating segments
International Financial Reporting Standards relating to financial instruments
International Financial Reporting Standards for consolidated financial statements
International Financial Reporting Standards relating to joint arrangements
International Financial Reporting Standards for interest disclosure in other entities
International Financial Reporting Standards regarding fair value measurement
International Financial Reporting Standards for regulatory deferral accounts
International Financial Reporting Standards relating to revenue from customer contracts
International Financial Reporting Standards for leases
International Financial Reporting Standards regarding insurance contracts
International Accounting Standard for Financial Statements Presentations
International Accounting Standard related to inventories
International Accounting Standard regarding Cash flow statements
International Accounting Standard for Accounting policies, changes in accounting estimates and errors
International Accounting Standard relating to Accounting for events after the reporting period
International Accounting Standard for construction contracts
International Accounting Standard regarding Income taxes
International Accounting Standard relating to property, plant and equipment
International Accounting Standard for leases
International Accounting Standard relating to revenue
International Accounting Standard includes employee benefits
International Accounting Standard for accounting for government grants and disclosure of government assistance
International Accounting Standard related to effect of change in foreign exchange rates
International Accounting Standard regarding borrowing cost
International Accounting Standard for related party disclosure
International Accounting Standard relating to accounting and reporting by retirement benefit plans
International Accounting Standard for separate financial statements
International Accounting Standard regarding investments in associates and joint ventures.
|International Accounting Standard relating to financial reporting in hyperinflationary economies|
International Accounting Standard for presentation of financial instruments
International Accounting Standard relating to earnings per share
International Accounting Standard includes interim financial reporting
International Accounting Standard for impairment of assets
|IAS 37||International Accounting Standard includes Provisions, contingent assets and liabilities|
|IAS 38||International Accounting Standard regarding intangible assets|
|IAS 39||International Accounting Standard for recognition and measurement of financial instruments|
|IAS 40||International Accounting Standard relating to investment property|
|IAS 41||International Accounting Standard for agriculture|