IFRS (International Financial Reporting Standards) is a set of accounting standards developed by the International Accounting Standards Board (IASB). The IFRS replaces the older set of standards, the IAS (International Accounting Standards).
International Financial Reporting Standards remove some of the subjectivity from financial reporting. They provide a consistent framework for recognition, measurement, presentation, and disclosure of transactions and events in financial statements.
While preparing financial statements, accountants use their judgment to apply accounting principles and assumptions. These statements are used by management, shareholders, analysts, government agencies, and other stakeholders.
Financial statements prepared in this way reflect the differences in accounting practices based on individual judgments. This makes it difficult for stakeholders to compare the financial results of different companies and to make investment decisions.
The convergence of financial reporting and accounting standards will bring about uniformity and transparency. It contributes to the free flow of global investment with substantial benefits to all global market stakeholders.
The aim of IFRS for listed companies is to promote transparent, sufficient, understandable, and timely financial information to support investors’ decision-making.
In the EU all listed companies have been required to adopt IFRS for their accounting standards and practices since January 2005.
In October 2007 the SEC decided to accept financial statements prepared according to IFRS for non-US companies listed in the US.
Many other countries use or are planning to introduce IFRS for listed companies. Therefore, a transition to IFRS is often a required step in a company’s growth journey.
Small and medium-sized entities (SMEs) are estimated to account for over 95 per cent of all companies around the world.
A less complex version of the IFRS is used for SMEs.
At O2I we offer IFRS convergence solutions for accounting and bookkeeping services. We are IFRS compliant and can help bring transparency and uniformity into your company’s financial transactions.
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