“What is IFRS?”, Objective of International Financial Reporting Standards and List of IFRS

Introduction

There have been significant developments in the financial reporting industry in India. The compliance and reporting requirements shift along with the expansion of international trade. It is becoming more and more challenging to present an entity’s financial statements in line with the reporting rules of every nation where it operates. This article will include information on “What is IFRS?”, the objective of International Financial Reporting Standards, and the List of IFRS.

What is IFRS (International Financial Reporting Standards)?

In order to promote openness in the presentation of financial information, the International Accounting Standards Board (IASB) has created the International Financial Reporting Standards (IFRS), which are accounting standards. The International Accounting Standards Board (IASB) was established in 2001.

It replaced the International Accounting Standards Committee (IASC), which had been tasked with creating global accounting standards before. London is home to the IASB. Additionally, it has made available the “Conceptual Framework for Financial Reporting,” published in September 2010, which offers a conceptual framework and the cornerstone for IFRS’s accounting standards.

 Objective of International Financial Reporting Standards

• Aid in creating accurate financial records

The information reported in the books of accounts is likely to be accurate, dependable, uniform, and suitable within the parameters of its regulations if International Financial Reporting Standards are adhered to. Investors can make wise financial judgements thanks to the high quality of financial records.

• Establish a Common Law

To bring everyone on the same page, one of its main goals is to ensure that common law is introduced and adopted by the greatest number of jurisdictions and nations. It makes sure that everyone abides by the same rules and uses a common format for reporting company activities.

• Ensure transparency, comparability, and flexibility

The financial records of complying organizations across different countries can be easily compared because of the consistency in reporting accounting practices. Before making an investment, investors can use these comparisons to discover risks and opportunities. It encourages international investment and trade as a result.

• Aid evaluation

It aids stakeholders in deciphering a company’s financial status and performance. These standards, for instance, are used by businesses and governments to provide trustworthy financial statements. It assists in accurately and consistently categorizing and reporting financial data. These financial records aid in decision-making and improve understanding.

Information on financial statement under IFRS

The following would ideally make up a comprehensive set of financial statements prepared in accordance with IFRS:

• A balance sheet, which is just a statement of financial condition as of the conclusion of the period.
• A statement of profit and loss for the year as well as a statement of other comprehensive income, which would contain any revenue or expenses that were not taken into account in the profit and loss account in order to adhere to other applicable requirements.

The above two statements can either be shown together or separately.

• A reconciliation between the amounts indicated at the start and end of the year is included in a statement of changes in equity.
• A cash flow statement for the time period.
• Notes to the financial statements, which include an overview of the key accounting principles used and other supporting details.

In the following cases, a statement of the financial condition from an earlier period may occasionally be included in the financial statements:

• When an entity restates an item in its financial accounts retroactively; when an entity applies an accounting policy retrospectively; or
• when a company changes the classification of an item in its financial accounts.

List of IFRS

Conclusion

International Financial Reporting Standards (IFRS) standards define how transactions and other accounting events must be represented in financial statements. They are made up of a collection of accounting rules. They are made to maintain the financial industry’s reputation and openness, allowing investors and business operators to make wise financial decisions.