IFRS: global, principles-based accounting standards for general-purpose financial statements.
Governance
- IFRS Foundation oversees.
- IASB sets standards.
- IFRS Interpretations Committee supports consistent application.
Scope of reporting
- Complete set: Statement of financial position, profit or loss and OCI, changes in equity, cash flows, and notes.
- Accrual basis. Going concern. Comparative information required.
Core principles
- Fair presentation and faithful representation.
- Materiality and aggregation.
- Substance over form.
- Consistency and comparability.
- Measurement bases include historical cost and current values (e.g., fair value, value in use).
High-impact standards (examples)
- IFRS 15 Revenue: five-step, performance-obligation model.
- IFRS 16 Leases: right-of-use model for lessees.
- IFRS 9 Financial instruments: classification/measurement, expected credit loss, hedge accounting.
- IFRS 3 Business combinations: acquisition method and goodwill.
- IAS 1/7/8 Presentation, cash flows, policies/estimates/errors.
- IAS 2 Inventories: lower of cost and NRV; LIFO prohibited.
- IAS 12/36/16/38/37/21: income taxes, impairment, PPE, intangibles, provisions, foreign currency.
- IFRS 17 Insurance contracts.
Recent and upcoming
- IFRS 18 Presentation and Disclosure in Financial Statements: new structure and required subtotals in profit or loss; effective in coming periods with early adoption permitted.
- IFRS 19 Subsidiaries without Public Accountability—Disclosures: reduced disclosures for eligible subsidiaries.
- IFRS for SMEs (latest edition): simplified framework for entities without public accountability.
Sustainability (separate board)
- ISSB: IFRS S1 (general sustainability) and IFRS S2 (climate) for investor-focused disclosures. Designed to integrate with financial statements.
IFRS vs US GAAP (headline)
- IFRS is more principles-based; GAAP more rules-based.
- Notable differences: inventory (LIFO not allowed under IFRS), impairment models, development costs capitalization, lease presentation details, and income-statement subtotals.
Adoption landscape
- Required or permitted in most major jurisdictions for listed companies.
- Some countries allow or mandate IFRS for consolidated reporting; local GAAP may remain for statutory or tax.
Implementation priorities
- Document accounting policies and significant judgments.
- Build controls for revenue recognition, lease accounting, and financial instruments.
- Track effective dates and transition requirements.
- Ensure disclosures meet specificity and aggregation thresholds.