IFRS: What is it and what are its components?

[ecis2016.org] Check this guide on IFRS which refers to International Financial Reporting Standards. 

There have been significant changes in India’s financial reporting field in the past five years. Increasingly, trade has moved beyond national borders, making compliance and reporting requirements more complex. The ability to present financial statements in accordance with the reporting requirements of every country in which an entity operates has become increasingly difficult.

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IFRS: Meaning

IFRS full form is International Financial Reporting Standards are a set of accounting standards that govern how specific types of transactions and events should be reported as financial statements. The International Accounting Standards Board (IASB) developed them and currently maintains them.

IASB: Meaning

The International Accounting Standards Board is an independent body of the IFRS Foundation that sets accounting standards. The International Accounting Standards Board was established on April 1, 2001, as the successor to the International Accounting Standards Committee.

IFRS vs GAAP

The Generally Accepted Accounting Principles (GAAP) were developed by the US financial accounting standards. IFRS and GAAP are different since they have separate accounting methods for recording and reporting expenses. IFRS is not as strict in defining revenue, allowing compliant companies to report revenue. 

IFRS is used internationally, while GAAP is used primarily in the US.

IFRS: Who is it useful for?

IFRS is followed in more than 160 countries, the most prominent ones being India, Canada, Russia, South Korea, South Africa, Chile, etc.

IFRS: Financial Statement Components 

In ideal circumstances, IFRS-compliant financial statements should include the following:

• Balance sheet, which is a statement of the financial position at the end of the period.
• The profit and loss statement for the year and the other comprehensive income statement. Other comprehensive income consists of items of income and expenses not included in the profit and loss statement to comply with other standards.

It is possible to combine or separate both of these statements.

• A reconciliation of equity amounts at the beginning and end of the year would be included in the statement of changes in equity.
• An analysis of cash flows for the period
• An explanation of the significant accounting policies used and other notes to the financial statements

A statement of the financial position of an earlier period is sometimes included in the financial statements in the following cases:

• A retrospective application of an accounting policy;
• Restatement of an item in a financial statement when an entity has retrospectively adjusted it;
• In the financial statements, when an item is reclassified.

IFRS: Advantages

• IFRS promotes transparency and trust in the global financial markets. 
• IFRS makes it easier for investors to compare and analyse various companies.

International Financial Reporting Standards (IFRS): List

IASB Standards are referred to as IFRS. International Accounting Standards (IAS) are a group of international standards issued by the predecessor body, IASC. From 1973 to 2001, the IASC issued the IAS. These standards remain in effect. Here are the standards:

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