International Financial Reporting Standards or IFRS are a set of disclosure requirements which describe how an entity’s financial position, financial performance and future cash flow should be presented. The IAS 19 Standard describes an actuarial method of valuing liabilities and specifically discusses the projection of benefits and a market-based discounting method to determine present values.
Publishing IFRS compliant financial statements confer many advantages to various users; a few of these are listed below:
- Transparent, comparable and consistent financial information to guide investors and lenders into making informed and optimal investment or lending decisions
- IFRS are designed as a common global language for business affairs, so that company accounts are understandable and comparable across industries and international boundaries
- Streamlined reporting for companies with global operations and foreign reporting requirements – potentially reducing costs
- Easier access to foreign capital markets and investments
- Facilitates cross-border acquisitions and joint ventures
- 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.