Demystifying International Financial Reporting Standards: A Comprehensive Guide
International Financial Reporting Standards are accounting guidelines developed to create global common financial principles. The (IFRS) aims to simplify the comparison process between companies worldwide that lack such standards. Today's article covers the definition of International Financial Reporting Standards, their importance, their most important objectives, and their main uses. So read on for all the information you need about these standards.
What are International Financial Reporting Standards (IFRS)? International Financial Reporting Standards (IFRS) consist of rules and accounting principles determining how transactions and other accounting events must be reported in other companies' financial statements. They are designed to maintain credibility and transparency in the financial world, which enables investors and business operators to make informed financial decisions.
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These standards originated from the European Union, allowing access to accounts and business affairs across the continent. Still, they were soon adopted as a common accounting language in 167 jurisdictions and countries, including all EU countries and Canada, Russia, India, South Korea, Chile, and South Africa.
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These standards were issued by the International Accounting Standards Board (IASB) in 2001, which was formed to develop and lay down the first principles of these standards. In June 2003, the first principles of International Financial Reporting Standards were developed and issued to replace the International Accounting Standards (IAS) adopted then.