Introduction of IFRS

To provide a perspective on the use of IFRS Standards, this guide summarises:

•        what IFRS Standards are;

•        why countries and other jurisdictions, and companies in them, would want to adopt IFRS Standards—that is, the perceived benefits;

•        the history of the development of IFRS Standards;

•        how IFRS Standards are developed;

•        for 150 countries and other jurisdictions, information about:

•        the accounting standards required for publicly accountable entities (listed companies and financial institutions);

•        the accounting standards required for small and medium-sized entities (SMEs); and

•        how IFRS Standards are endorsed or otherwise authorised for use;

•        links to resources; and

•        requirements of current IFRS Standards.

The vision

The International Accounting Standards Board (the Board)

IFRS Standards are developed by the Board, which is the standard-setting body of the IFRS Foundation, an independent, private sector, not-for-profit organisation.

The Board was formed in 2001 as the successor organisation to the International Accounting Standards Committee, which had been setting International Accounting Standards (IAS Standards) since 1973.  Both bodies have been London-based since their inception, but they have a global mission.

The Board is committed to developing, in the public interest, a single set of high-quality global accounting standards that provide investors, lenders and others with relevant, transparent and  comparable information in general-purpose financial statements.

The vision in 2000—a single set of global accounting standards

The founders of the Board set out the fundamental objective of the Board and the Foundation under which it operates in a Constitution adopted in early 2000:

To develop, in the public interest, a single set of high-quality, understandable and enforceable global accounting standards that require high-quality, transparent and comparable information in financial statements and other financial reporting to help participants in the world’s capital markets and other users make economic decisions.

That vision  has been  publicly supported by many international organisations, including the G20, the World Bank, the International Monetary Fund  (IMF), the Basel Committee, International Organization of Securities Commissions, the International Federation of Accountants (IFAC), and the European Parliament and the Council of the European Union.

That vision is consistent with the objective of the Board’s predecessor standard-setting body, IASC, which developed IAS Standards from 1973 to 2000.What are IFRS Standards?

IFRS Standards constitute a globally recognised set of standards for the preparation of financial statements by business entities. IFRS Standards prescribe:

•        the items that should be recognised as assets, liabilities, income and expenses;

•        how to measure those items;

•        how to present them in a set of financial statements; and

•        related disclosures about those items.

Mission of the IFRS Foundation and the International Financial Reporting Standards Board

Our mission is to develop IFRS Standards that bring transparency, accountability and efficiency to financial markets around the world.  Our work serves the public interest by fostering trust, growth and long-term financial stability in the global economy.

•        IFRS Standards bring transparency by enhancing the international comparability and quality of financial information, enabling investors and other market participants to make informed economic decisions.

•        IFRS Standards strengthen accountability by reducing the information gap between the providers of capital and the people to whom they have entrusted their money.  IFRS Standards provide information that is needed to hold management to account.  As a source of globally comparable information, IFRS Standards are also of vital importance to regulators around the world.

•        IFRS Standards contribute to economic efficiency by helping investors to identify opportunities and risks across the world, thus improving capital allocation. For businesses, the use of a single, trusted accounting language lowers the cost of capital and reduces international reporting costs.

We are a not-for-profit, public-interest organisation with oversight by a Monitoring Board of public authorities.  Our governance and due process are designed to keep our standard-setting independent from special interests while ensuring accountability to our stakeholders around the world.

How IFRS Standards are developed

IFRS Standards are developed by the Board, which:

•        is an independent standard-setting board, overseen by a geographically and professionally diverse body of Trustees of the Foundation, which is publicly accountable to a Monitoring Board of public capital market authorities.

•        has (at 1 April 2017) 13 full-time members drawn from 12 countries and a variety of professional backgrounds.  The members are appointed by, and accountable to, the Trustees of the Foundation, who are required to select the best available combination of technical expertise and diversity of international business and market experience.

•        has a staff of approximately 150 people from 30 countries and is based in London, United Kingdom, with a small Asia-Oceania coordination office located in Tokyo, Japan.

•        is supported by the external IFRS Advisory Council, the Accounting Standards Advisory Forum (the ASAF), composed of national standard-setters, and the IFRS Interpretations Committee (the Interpretations Committee) to offer guidance when divergence in practice occurs.

•         follows a thorough, open, participatory and transparent due process.

•        engages with investors, regulators, business leaders and the global accountancy profession at every stage of the process.  The due process includes:

•        opportunities for public comment at various stages in the development of a Standard;

•        Board deliberations at meetings that are open to public observation and are webcast; and

•        public availability of all of the agenda papers that form the basis for the Board’s deliberations, as well as all of the comments received from interested parties.

•        collaborates with the worldwide standard-setting community.