IFRS An Overview. The term IFRS is an acronym for International financial reporting standards. which means a set of financial reporting standards issued by International accounting standards board (IASB). Find An Overview of International Financial Reporting Standards. In this article you can fins all details for IFRS. Recently we provided How to Become a CPA of US.
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IFRS An Overview
The term IFRS includes
- 1.IFRS
- 2.IAS
- 3.Interpretations issued by IFRIC and SIC.
NEED FOR IFRS?
Globalization and liberalisation have brought about significant changes in the attitudes and perceptions of the corporate world. Due to advancements in the field of information technology, the entire world has become a global village. To be precise the whole world is a market with global customers and global investors .In other words now everything has become GLOCAL (global local).
Companies are getting listed at stock exchanges located in different countries. They are also raising capital abroad across the globe .A basis understanding analysis and interpretation of financial statements of those companies are prerequisites before making such foreign investments ,raising capital abroad etc.But financial statements of those companies abroad will be primarily based on the accounting principles and practices of the respective country.
The difference in accounting principles and practices and also the reporting requirements make the financial statements and reports ambiguous and unfriendly for the global investors. As already discussed Accounting is the language of business ,it would be wise and helpful if there is a common language for the whole world to understand the financial statements in an unambiguous and friendly manner. There is an urge to converge accounting information into common reporting standards which is globally accepted and adopted. Hence IFRS came into picture in India.
Main advantages of IFRS:
1. Minimises diversity in accounting practices.
2. Improves the quality and transparency of financial reporting process.
3. Increase the trust and reliance placed by investors , analysts and stakeholders in a company’s financial statements.
4. Reduces the cost of conversion of financial statements for local companies which makes investments , raising capital , listing abroad.
5. Provides a drive to cross boarder acquisition and partnership, alliances with foreign entities there by business as well as economic growth expands globally.
In a line the merits of IFRS are:
1.significance
2.completeness
3.understandability
4.reliability
5.Timeliness
6.Neutrality
7.Verifiability
8.Consistency
9.Comparability
10.Transparency.
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