Must Knows

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.

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:

IFRS No.

IFRS Title

IFRS 1 First-time Adoption of International Financial Reporting Standards

 

IFRS 2 Share-based Payment

 

IFRS 3 Business Combinations

 

IFRS 4 Insurance Contracts

 

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

 

IFRS 6 Exploration and Evaluation of Mineral Resources

 

IFRS 7 Financial Instruments: Disclosures

 

IFRS 8 Operating Segments

 

IFRS 9 Financial Instruments

 

IFRS 10 Consolidated Financial Statements

 

IFRS 11 Joint Arrangements

 

IFRS 12 Disclosure of Interests in Other Entities

 

IFRS 13 Fair Value Measurement

 

IFRS 14 Regulatory Deferral Accounts

 

IFRS 15 Revenue from Contracts with Customers

 

IFRS 16 Leases

 

IFRS 17 Insurance Contracts

 

IAS 1 Presentation of Financial Statements

 

IAS 2 Inventories
IAS 7 Statement of Cash Flows

 

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

 

IAS 10 Events after the Reporting Period

 

IAS 11 Construction Contracts

 

IAS 12 Income Taxes
IAS 16 Property, Plant, and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 21 The Effects of Changes in Foreign Exchange Rates
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosures
IAS 26 Accounting and Reporting by Retirement Benefit Plans
IAS 27 Separate Financial Statements
IAS 28 Investments in Associates and Joint Ventures
IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 32 Financial Instruments: Presentation
IAS 33 Earnings per Share
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities, and Contingent Assets
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture

Source: https://ecis2016.org/.
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Debora Berti

Università degli Studi di Firenze, IT

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