In the financial domain, International Financial Reporting Standards (IFRS) are a set of accounting rules for public companies’ financial statements that bring more transparency to record maintenance. They are designed to maintain credibility and make better financial decisions to support business operators and investors. IFRS is more relevant in terms of following accounting standards and becoming aware of international standards.
If you are new to the finance segment, follow the blog to get new ideas on international financial reporting standards and their relevance to accounting and other compliances.
What are International Financial Reporting Standards?
IFRS, which stands for International Financial Reporting Standards, is a set of accounting rules and standards that determine how accounting events should be reported in business financial statements. Issued by the International Accounting Standards Board (IASB), IFRS aims to make financial statements more transparent and consistent. Companies should follow IFRS standards for managing compliance to increase credibility and transparency.
Most global nations adhere to IFRS; however, the USA is a notable country that doesn’t prescribe IFRS but instead follows GAAP (Generally Accepted Accounting Principles). Companies following this IFRS standards compliance to support their financial decisions considering factors like cost, complexity, and risks.
List of International Financial Reporting Standards
Here is the list of international financial reporting standards issued by the International Accounting Standards Board (IASB); follow this:
| Standard No. | Standard Title | Issue Dates |
| IFRS 1 | First-time Adoption of International Financial Reporting Standards | 2008 |
| IFRS 2 | Share-based Payment | 2004 |
| IFRS 3 | Business Combinations | 2008 |
| IFRS 4 | Insurance Contracts | 2004 |
| IFRS 5 | Non-current Assets Held for Sale and Discontinued Operations | 2004 |
| IFRS 6 | Exploration and Evaluation of Mineral Resources | 2004 |
| IFRS 7 | Financial Instruments: Disclosures | 2005 |
| IFRS 8 | Operating Segments | 2006 |
| IFRS 9 | Financial Instruments | 2013 |
| IFRS 10 | Consolidated Financial Statements | 2011 |
| IFRS 11 | Joint Arrangements | 2011 |
| IFRS 12 | Disclosure of Interests in Other Entities | 2011 |
| IFRS 13 | Fair Value Measurement | 2011 |
| IFRS 14 | Regulatory Deferral Accounts | 2014 |
| IFRS 15 | Revenue from Contracts with Customers | 2014 |
| IFRS 16 | Leases | 2016 |
| IFRS 17 | Insurance Contracts | 2017 |
| IFRS 18 | Presentation and Disclosures in Financial Statements | 2024 |
| IFRS 19 | Subsidiaries without Public Accountability: Disclosures | 2024 |
Importance of International Financial Reporting Standards (IFRS)
Anyone working in the finance segment must be aware of IFRS or International Financial Reporting Standards. So, to advance your career in finance, you must understand compliance and maintain proper accounting standards and financial statements. Here are the relevant points that show the importance of IFRS:
1- Transparency
Companies, small firms, and government agencies prepare financial statements to enhance transparency and accountability. Adhering to IFRS standards will help minimise the risk of error and manipulation in recording with the scope of more clarity and consistency in work.
2 – Accountability
IFRS standards help standardise reporting, ensuring greater accountability and accuracy and supporting stakeholders, analysts, and investors. Bridging the gap in accounting with IFRS can help companies divert hefty penalties due to incorrect financial reporting.
3 – Security & Flow
Following IFRS standards will help track transaction flow and record fund information regarding direct and indirect foreign investment across the nation. With IFRS, it becomes essential to deal with significant assets and get into heavy transactions.
4 – Uniformity
The International Financial Reporting Standards (IFRS) were developed to ensure uniformity and better presentation of financial statements. Since every other company follows a set of rules and common laws, economic growth can be easily compared.
What Are the IFRS Requirements?
IFRS specifies how companies should maintain records and reports for expenses and income. Here are the IFRS (International Financial Reporting Standards) requirements that companies must follow for accounting practices and statements:
Statement of Comprehensive Income
It could be one statement that was separated from the Profit & Loss statement and a statement of other income with the mention of property and equipment.
Statement of Financial Position
It fulfils IFRS requirements with balance sheet components for better accounting and recording of financial data.
Statement of Cash Flows
Next, it compiles the company’s financial transactions for the given period, separately posting cash flow into operations, investing, and financing.
Statement of Changes in Equity
It is also known as the statement of retained earnings, and it records a company’s change in earnings and profit for a specific financial period.
These compliance requirements and reporting of accounting policies with adherence to IFRS standards help maintain financial reporting. Suppose a company has multiple subsidiaries; as per the rules, the parent company and its other ventures have to record distinct accounting to present it to investors, auditors, government regulators, and other stakeholders.
Accurate Reporting With IFRS Standards!
To bring more consistency and uniformity to accounting practice, principles, and statements, following the IFRS standards helps investors with financial analysis and decision-making to foster more transparency in the global financial market. Following the robust procedures, accounting reporting will have fewer complications that lead to business risk and financial burden. IFRS fosters more transparency and trust in the financial market to make a good comparison of company performance. So, accurate reporting with verified financial statements using standard accounting principles will bring on more prospective growth for companies.
