Hi readers, we are commencing our IFRS journey of our blog today. We wanted to start last week, but due to some technical hitches could not do so.
One question which comes at the forefront “What is IFRS?”
IFRS stands for “International Financial Reporting Standards” These are a set of accounting standards developed by the International Accounting Standards Board (IASB). A lot of organizations are going global as on date, with their corporate base out of that country. This is one of the key reasons why a need started being felt for a unified and transparent mechanism of worldwide reporting. One key challenge is that each country has its own “Generally Accepted Accounting Principles” (GAAP), and each country has been pushing businesses to report as per their GAAP, at least for the operations in the specified geography. Hence a need was felt to build some global standards and other needs which I can list as below:
- To develop a unified set of accounting and reporting standards
- To build a single global financial reporting language
- An accounting framework with global acceptance
- High quality, transparent, understandable, globally enforceable
- More cross border transactions
- Access to international capital and investments
- Enhance confidence of global stakeholders
- Facilitate international acquisitions and mergers
- Peer to Peer Comparison
This gave birth to IFRS, which is becoming the global standard for the preparation of public company financial statements.