IFRS stands for International Financial Reporting Standards which is a globally accepted set of accounting standards presented by IASB (International Accounting Standard Board). Previously it was known as IAS – International Accounting Standards and it is now becoming the mostly used accounting standards by listed public companies across different countries in the world.
Though it is widely used by the worldwide public listed companies along with the most of Fortune 500 companies, Compliance with IFRS is not mandatory at all. But main governing body of many countries requires their publicly listed enterprises to prepare financial statements as per the IFRS guidelines.
Main features of IFRS are
IFRS comprise of five major components, which are provided below
IFRS’s main objective is to provide the proper information about the financial position, performance to a wide range of investors and analysts which will help them to make the proper investment decision. It also provides the current financial status the company to its all the shareholders.
1. Framework: Framework addresses the concepts underlying the information presented in general purpose financial statements. The objective is to facilitate the consistent and logical formulation of IFRS and resolve all the accounting related issues that can occur.
2. IFRS: Standards issued by IASB after 2001 are termed as IFRS. As of now, there are total eight different standards which have been issued.
3. IAS: Standards issued by IASC before 2001 are termed as IAS. As of now, there are twenty nine standards which are active.
4. IFRIC Interpretations: Interpretations of IFRS are prepared by the International financial reporting interface committee (IFRIC) to give necessary guidance on different accounting issues that different companies are facing while using the IFRS accounting standards. There are now 16 IFRIC interpretations are available to help all the companies across the world.
5. SIC Interpretations: Before IFRIC replacing the old set of interpretations in 2002, previous set of interpretations were knows as the Standing Interpretations committee (SIC) and there were total 11 SICs available before it was replaced in 2002.
IFRS use two main assumptions
IFRS – Financial Statements
As per IFRS, Financial Statements should have
1. Four Characteristics
2. Five Elements
List of IFRS and IFRICs
Here is the list of IFRS
Here is the list of IFRICs
The main differences among IFRS, India GAAP and US GAAP are presented in another post Main Difference among IFRS, Indian GAAP and US GAAP