IFRS stands for International Financial Reporting Standards. It is a set of accounting rules and guidelines developed by the International Accounting Standards Board (IASB) to provide a common framework for financial reporting on a global level. IFRS is designed to achieve consistency, transparency, and comparability in financial reporting across different countries and industries.
The objective of IFRS is to ensure that financial statements are prepared in a manner that provides reliable and relevant information to users, such as investors, creditors, and other stakeholders. It provides a standardized format and terminology for presenting financial statements, including balance sheets, income statements, cash flow statements, and statements of changes in equity.
IFRS covers various aspects of financial reporting, including the recognition, measurement, presentation, and disclosure of financial information. It provides guidance on key accounting topics such as revenue recognition, lease accounting, depreciation, impairment of assets, fair value measurement, and financial instrument accounting.
One of the key features of IFRS is its principle-based approach to accounting, as opposed to a rules-based approach. This means that IFRS provides broad principles and concepts that allow companies to exercise judgment in applying the standards to their specific circumstances. However, IFRS also includes detailed guidance and illustrative examples to assist companies in the application of these principles.
IFRS is widely adopted in many countries around the world, including most European countries, Australia, Canada, and several Asian and African countries. Adoption of IFRS is mandatory for listed companies in these jurisdictions, while others may voluntarily adopt it. The goal is to promote consistency and comparability of financial reporting, facilitating global investment and cross-border transactions.
