What is International Financial Reporting Standards (IFRS)?

Published by Thomas Herold in Accounting, Laws & Regulations

'International Financial Reporting Standards (IFRS)' is explained in detail and with examples in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

The International Financial Reporting Standards prove to be the principally used set of accounting regulations in the world. Their main rival is the United States’ based GAAP Generally Accepted Accounting Procedures. These IFRS turn out to be a single collection of accounting standards. They were created and are maintained still by the IASB International Accounting Standards Board based in London.

The IASB developed these IFRS standards with the goal of them being effectively utilized on a consistent basis throughout the globe. They were written with developed, developing, and emerging market economies and nations all in mind. These standards provide both investors and other consumers of business financial statements with the necessary tools to make like comparisons between various companies. Thanks to the IFRS, investors can effectively compare and contrast the financial performances of various publicly traded corporations on a consistent basis against their global peers.

This is a high standard for the IFRS. It of course requires more and more countries sign on to these accounting standards in order for the objective to be effectively and eventually met. This vision of a single set of worldwide accounting standards is well supported by numerous globally active organizations. Among these are the International Monetary Fund, the World Bank, the G20, the Basel Committee, the IFAC, and the IOSCO.

Thanks to the tireless efforts of the IASB and the IFRS foundation along with the support of these other active international organizations, the IFRS account standards have now been made law in over 100 countries. These include all of the 27 core countries in the European Union plus Great Britain as well as over two thirds of the member nations comprising the G20. This makes sense as the G20 and other critical worldwide bodies have always encouraged the important task of the IASB and its goals of achieving a universally recognized set of international accounting standards that everyone can rely on and understand.

Since the year 2001, the International Accounting Standards Board has created and continued to improve and promote the International Financial Reporting Standards. The IASB turns out to be the body that sets the standards for the IFRS Foundation. This foundation is an organization that serves the public good. It has been well recognized for the award winning examples of its organizational transparency as well as the participation of all of its stakeholders and other participants.

The 150 members strong staff based in London hail from around 30 individual countries. The IASB operates under the auspices of a 14 member Board of Directors that is appointed and monitored by 22 different trustees coming from around the globe. These trustees themselves are further accountable to a public authority monitoring board. This way all of the various members of the leadership at the IASB are accountable to someone else.

The work of the IASB via the IFRS allows international accountants to more consistently deliver a standard means of detailing the financial performances of companies and other financial entities. This benefits investors, companies, and regulators. The standards of accounting that the IASB creates and the IFRS represents give the preparers of financial statements a complete set of principles and rules to follow when they are compiling the financial accounts of these organizations. This makes for an international standardization throughout the global markets.

It all works because the various corporations traded on public stock exchanges are required by law to prepare and produce financial statements that follow the appropriate IFRS accounting standards as do their business rivals and peers. The IFRS foundation maintains an online database of profiles on 143 countries and jurisdictions to show whether or not they accept and utilize these standards.

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The term 'International Financial Reporting Standards (IFRS)' is included in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.