What is IFRS?
International Financial Reporting Standards (IFRS) are accounting standards published by the International Accounting Standards Board (IASB) with the aim of providing a common accounting language to increase the transparency of the presentation of financial information.
What is the IASB?
The International Accounting Standards Board (IASB) is an independent body formed in 2001 with the sole responsibility of establishing international financial reporting standards (IFRS). It succeeded the International Accounting Standards Committee (IASC), which had previously been responsible for establishing international accounting standards. The IASB is based in London. He also provided the Conceptual Framework for Financial Reporting published in September 2010, which provides a conceptual understanding and the basis of accounting practices under IFRS.
Components of IFRS Financial Statements:
A complete set of financial statements prepared in accordance with IFRS would ideally include the following:
- A statement of financial position at the end of the period - more commonly known as a balance sheet.
- A statement of income for the year and the statement of other comprehensive income - Other comprehensive income would include items of income/expense that are not recognized in the income statement to comply with other relevant standards.
These two declarations can be combined or displayed separately.
- A statement of changes in equity - This would include a reconciliation between the amounts shown at the beginning and at the end of the year.
- A statement of cash flows for the period.
- Notes to the financial statements - including a summary of the main accounting policies followed and other explanatory information.
The financial statements would sometimes also include a statement of financial position for a prior period in the following scenarios:
- When an entity retrospectively applies an accounting method;
- When an entity has retrospectively restated an item in its financial statements; or
- When an entity reclassifies an item in its financial statements.
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