What is IFRS?

IFRS stands for International Financial Reporting Standards. It is a set of accounting standards developed by the International Accounting Standards Board (IASB), an independent international organization. IFRS is designed to provide a common language for business entities’ financial reporting, making financial statements transparent, comparable, and understandable across different countries and industries.

• Global Applicability: IFRS is used by companies in over 140 countries, making it the most widely accepted global accounting framework. Many countries, especially Europe, Asia, and South America, have adopted IFRS for financial reporting.
• Principles-Based Approach: IFRS follows a principles-based approach, providing a conceptual framework with broad principles rather than detailed rules. This approach allows for flexibility in application and interpretation.
• Standards and Interpretations: IFRS includes a set of standards, interpretations, and framework documents that cover various aspects of financial reporting, including revenue recognition, financial instruments, leases, and insurance contracts.

IFRS (International Financial Reporting Standards) and GAAP (Generally Accepted Accounting Principles) are two different sets of accounting standards used globally. IFRS improves transparency, and consistency in financial reporting around the world making it simpler and easier for the investor to compare financial statements from different countries; whereas, GAAP are the rules and guidelines that companies follow to make their financial statements. GAAP makes sure that all companies report their financial info in the same way so that it’s easier to compare them.