INTERNATIONAL ACCOUNTING STANDARDS (IAS)/ INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) :
IFRS are now becoming the global financial reporting language. The importance of IFRS has grown significantly in the recent times. However the concept of IFRS is not new. Back in the year 1973, the professional accountancy bodies of developed economies such as USA, London, Germany, Japan, France etc. recognised the need to harmonize the accounting principles and standards followed by different countries and formed International Accounting Standards Committee (IASC). IASC is a not for profit corporation incorporated in USA and operates from London. It took the responsibility of harmonizing accounting practices followed worldwide by issuing International Accounting Standards (IAS). These IAS were adopted by many multinational companies and endorsed by many countries as their own standards. Most of the nations adopted these international standards but modified them according to their situations and environment prevailing in their own country. With the passage of time several country level accounting principles emerged and there were many gaps between these local generally accepted accounting principles and the IAS. So, in the year 2001, international fraternity of accountants decided to revise the whole framework. In 2001, IASC was renamed as International Accounting Standards board (IASB).
The accounting standards issued by IASB are known as International Financial Reporting Standards (IFRS). IFRS is a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are nothing but principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board (IASB). International Financial Reporting Standards comprise of:
– 9-International Financial Reporting Standards (IFRS)—standards issued after 2001 by IASB.
– 29-International Accounting Standards (IAS)—standards issued before 2001by IASC which are still valid.
– 16-Interpretations issued by International Financial Reporting Interpretations Committee (IFRIC) after 2001.
– 11–interpretations issued by Standing Interpretations Committee (SIC) before 2001.
However, in practice IFRS is interchangeably used to denote individual accounting standards issued by IASB as well as International accounting principles collectively. Following are some of the advantages of IFRS:
– Facilitate increased comparability of financial information between companies operating in different countries.
– The financial reporting process would become more transparent.
– The standardization of accounting methodology provides creditors and investors with the ability to analyze businesses around the world using the same financial methods.
– It would also permit international capital to flow more freely.
– It would give investors a better understanding to the financial statements and assess the investment opportunities in other countries.
– It would also benefit the accounting professionals as they will be able to sell their services in the different parts of the world.
All these benefits of IFRS have prompted many countries to pursue convergence of national accounting standards with IFRS. India has also decided to facilitate the convergence of the Indian accounting standards with IFRS and in this direction all existing accounting standards are being revised and converged with corresponding IAS/ IFRS. Convergence of entire world towards IFRS would benefit the corporate sector, investors, regulators and facilitate economic growth as a whole.
The following International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the IASB which are in force:
| IAS-1 | Presentation of Financial Statements |
| IAS-2 | Inventories |
| IAS-7 | Cash Flow Statements |
| IAS-8 | Accounting Policies, Changes in Accounting Estimates and Errors |
| IAS-10 | Events After the Balance Sheet Date |
| IAS-11 | Construction Contracts |
| IAS-12 | Income Taxes |
| IAS-14 | Segment Reporting |
| IAS-16 | Property, Plant and Equipment |
| IAS-17 | Leases |
| IAS-18 | Revenue |
| IAS-19 | Employee Benefits |
| IAS-20 | Accounting for Government Grants and Disclosure of Government Assistance |
| IAS-21 | The Effects of Changes in Foreign Exchange Rates |
| IAS-23 | Borrowing Costs |
| IAS-24 | Related Party Disclosures |
| IAS-26 | Accounting and Reporting by Retirement Benefit Plans |
| IAS-27 | Consolidated and Separate Financial Statements |
| IAS-28 | Investments in Associates |
| IAS-29 | Financial Reporting in Hyperinflationary Economies |
| IAS-31 | Interests in Joint Ventures |
| IAS-33 | Earnings Per Share |
| IAS-34 | Interim Financial Reporting |
| IAS-36 | Impairment of Assets |
| IAS-37 | Provisions, Contingent Liabilities and Contingent Assets |
| IAS-38 | Intangible Assets |
| IAS-39 | Financial Instruments: Recognition and Measurement |
| IAS-40 I | nvestment Property |
| IAS-41 | Agriculture |
| IFRS-1 | First-time Adoption of International Financial Reporting Standards |
| IFRS-2 | Share-based Payment |
| IFRS-3 | Business Combinations |
| IFRS-4 | Insurance Contracts |
| IFRS-5 | Non-current Assets Held for Sale and Discounted Operations |
| IFRS-6 | Exploration for and Evaluation of Mineral Resources |
| IFRS-7 | Financial Instrument: Disclosures |
| IFRS-8 | Operating Segments |
| IFRS-9 | Financial Instruments |