International financial reporting standards (IFRS)
International Financial Reporting Standards (IFRS) is a set of accounting standards developed by the International Accounting Standards Board (IASB) that provide a common framework for how companies prepare and present their financial statements. The purpose of IFRS is to provide a globally accepted set of accounting standards that improve the comparability and transparency of financial reporting across different countries and industries.
IFRS works by providing a consistent set of guidelines and principles for companies to follow when reporting their financial information. These standards cover a wide range of topics, including revenue recognition, lease accounting, financial instruments, and consolidation. Companies are required to apply these standards when preparing their financial statements, which includes the balance sheet, income statement, and cash flow statement.
IFRS also includes a set of International Financial Reporting Standards (IFRS) for Small and Medium-Sized Entities (SMEs) which is a simplified version of IFRS for small and medium-sized entities. This version of IFRS is designed to be less complex and less costly for SMEs to implement.
IFRS is mandatory in more than 120 countries, and many other countries also allow or even require the use of IFRS for companies that are publicly traded or have a significant number of shareholders. IFRS is also increasingly being adopted by private companies as well.
