International Financial Reporting Standards

What are the IFRS Standards? International Financial Reporting Standards are a set of disclosure requirements which describe how an entity’s financial position, financial performance and future cash flow should be presented. Furthermore, the IAS 19 standard describe an actuarial method of valuing liabilities and specifically discusses the projection of benefits and a market-based discounting method to determine present values.

PublishingIFRS compliant financial statements confers many advantages to various users; a few of these are listed below:

  1. Transparent, comparable and consistent financial information to guide investors and lenders into making informed and optimal investment or lending decisions
  2. IFRS are designed as a common global language for business affairs, so that company accounts are understandable and comparable across industries and international boundaries
  3. Streamlined reporting for companies with global operations and foreign reporting requirements – potentially reducing costs
  4. Easier access to foreign capital markets and investments
  5. Facilitates cross-border acquisitions and joint ventures
  6. Enables proper assessments to be made on the financial strengths of organizations (especially important for companies that are listed on a stock exchange or involved in mergers and acquisitions).

The IFRS Standards are issued by the International Accounting Standards Board (2001) and include standards for accounting for employee benefit costs, including benefits payable after an employee leaves employment through termination, retirement or death. Such employee benefits could include lump sums, pensions, medical insurance, life insurance and more, payable at the end of service, on retirement, to dependents on death, or on other future life outcomes, or all or some combination of the preceding.

International Accounting Standards

What are International Accounting Standards or IAS? Historically, IFRS reporting evolved out of the older International Accounting Standards – or IAS. These were issued by the IASB or International Accounting Standards Board (or earlier IASC; a Committee forum)and were adopted for IFRS, with the IAS name retained. This means that IAS Standards are the same as IFRS Standards, but from an earlier generation. They are still subject to maintenance update and should be considered new to countries and companies which newly implement IFRS.