International Financial Reporting Standards for Financial Accounting
- The purpose of IFRS: International Financial Reporting Standards aim to provide unified, accurate, and comparable financial reports, so that investors, creditors, and other stakeholders can make decisions about a company’s financial condition, performance, and cash flows.
- History of IFRS: IFRS was developed and issued by the International Accounting Standards Board (IASB). The IASB replaced the International Accounting Standards Committee (IASC), which is responsible for developing International Accounting Standards (IAS).
- Core Standards: IFRS includes a series of core standards, including:
a. IFRS 1- Regulations to be followed by companies adopting International Financial Reporting Standards for the first time;
b. IFRS 9- Measurement and Classification of Financial Assets and Financial Liabilities;
c. IFRS 15- Recognition and timing of revenue;
d. IFRS 16- Accounting Treatment of Lease Contracts;
e. IFRS 17- Accounting Treatment of Insurance Contracts.
- Basic concepts and standards: IFRS establishes a series of basic concepts and standards to guide the preparation and disclosure of financial reports. These include prioritizing substantive economy over legal form, fair value, and the principle of going concern.
- Fair value measurement: IFRS emphasizes the measurement of fair value for financial assets, financial liabilities, and other investments. It encourages the use of market data and related financial models for measurement to reflect market prices and risks.
- Disclosure Requirements: IFRS requires companies to disclose important information related to financial statements. This includes accounting estimates and assumptions, significant transactions and events, mergers and acquisitions, concerns and risks, legal proceedings, and other significant matters.
- Scope of application of IFRS: IFRS applies to listed companies, financial institutions, non listed financial institutions, and other organizations. In some countries, IFRS also applies to medium-sized and small businesses.
- Global adoption of IFRS: IFRS has been widely adopted globally, especially in Europe, Asia, and Australia. Some countries have already fully adopted IFRS, while others have adopted IFRS to some extent in a national variant or in combination with other accounting standards.
IFRS, as a representative of global accounting standards, is crucial for the transparency and stability of international financial markets. Companies adopting IFRS can provide consistent financial reports, enabling investors to better compare the financial status and performance of companies, and providing information support for cross-border investment decisions.