What is IFRS?
IFRS, or International Financial Reporting Standards, are a set of accounting standards developed by the International Accounting Standards Board (IASB). IFRS is a globally accepted framework that establishes the principles for the preparation and presentation of financial statements. In this article, we will explore IFRS in more detail, including what it is, how it works, and its benefits.
IFRS provides a common accounting language that enables transparency and accountability in financial reporting. It is used by companies worldwide to prepare financial statements that are consistent and comparable across international borders. IFRS comprises a set of principles-based standards that provide guidance on how to recognize, measure, present, and disclose financial information in a way that is useful for users of financial statements.
One of the key benefits of IFRS is that it improves the quality of financial reporting. By providing a single set of accounting standards, IFRS eliminates confusion and discrepancies that can arise from differences in accounting practices across countries. This, in turn, helps investors and other stakeholders make informed decisions about a company's financial performance and prospects.
Another benefit of IFRS is that it facilitates international investment and reduces costs for multinational companies. By adopting IFRS, companies can prepare financial statements that are compliant with the accounting standards of multiple countries, which can reduce the need for costly translations and reconciliations.
IFRS is also designed to be flexible and adaptable to changing business environments. The IASB regularly updates and revises the standards to reflect changes in the global economy and financial markets. This ensures that IFRS remains relevant and useful for companies operating in different industries and regions.
In Singapore, all companies listed on the Singapore Exchange (SGX) are required to prepare their financial statements in accordance with IFRS. Other companies may choose to use IFRS as well, particularly if they have international operations or subsidiaries.
In summary, IFRS is a set of global accounting standards that provide guidance on how to prepare and present financial statements in a transparent and comparable way. It improves the quality of financial reporting, reduces costs for multinational companies, and is flexible and adaptable to changing business environments. As a result, it is an important framework for companies operating in Singapore and around the world.