International Financial Reporting Standards

IFRS? International Financial Reporting Standards (IFRS) are principles-based standards, interpretations and the framework (1989) adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On April 1, 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards. The IASB has continued to develop standards calling the new standards IFRS.

The goal of IFRS is… The goal of IFRS is to provide a global framework for how public companies prepare and disclose their financial statements. IFRS provides general guidance for the preparation of financial statements, rather than setting rules for industry-specific reporting. Having an international standard is especially important for large companies that have subsidiaries in different countries. Adopting a single set of world-wide standards will simplify accounting procedures by allowing a company to use one reporting language throughout. A single standard will also provide investors and auditors with a cohesive view of finances.

Structure of IFRS IFRS are considered a "principles based" set of standards in that they establish broad rules as well as dictating specific treatments. International Financial Reporting Standards comprise: International Financial Reporting Standards (IFRS)—standards issued after 2001 International Accounting Standards (IAS)—standards issued before 2001 Standing Interpretations Committee (SIC)—issued before 2001 Conceptual Framework for Financial Reporting (2010)

Requirements of IFRS a Statement of Financial Position a Statement of Comprehensive Income separate statements comprising an Income Statement and separately a Statement of Comprehensive Income, which reconciles Profit or Loss on the Income statement to total comprehensive income a Statement of Changes in Equity (SOCE) a Cash Flow Statement or Statement of Cash Flows notes, including a summary of the significant accounting policies

Adoption of IFRS IFRS are used in many parts of the world, including the European Union, India, Hong Kong, Australia, Malaysia, Pakistan, GCC countries, Russia, South Africa, Singapore and Turkey. As of 27 August 2008, more than 113 countries around the world, including all of Europe, currently require or permit IFRS reporting.

Globalization The goal with IFRS is to make international comparisons as easy as possible. This is difficult because, to a large extent, each country has its own set of rules. For example, U.S. GAAP are different from Canadian GAAP. Synchronizing accounting standards across the globe is an ongoing process in the international accounting community.

Three Advantages to an End User of Using IFRS Accounting With Financial Statements Financial Statement Format Companies adhering to IFRS use a similar format for their financial statements. Investors who compare financial statements from companies operating in different countries can place the statements next to each other. Understandability End users also enjoy the advantage of understanding the financial data communicated whether it comes from one country or a different one. IFRS accounting guidelines require that all companies follow the same guidelines. Global Comparability End users reap the benefits of comparing the financial statements from a company in one country to a company in another country. He accesses the financial statements either as a hard copy or electronically via the Internet. The end user compares the net income and calculates financial ratios for different companies.

As more and more countries begin to use the same set of financial reporting standards, the financial reporting process should become more transparent. This transparency translates into benefits to all parties involved, giving them greater financial credibility and an increased access to the world capital markets. Concise and readily understandable financial and accounting information benefits investors, companies and capital markets worldwide. The standardization of accounting methodology provides creditors and investors with the ability to analyze businesses around the world using the same financial methods. This symmetry allows for the benchmarking of sales, marketing and other key financial indicators internationally, across different industry segments.

IFRS better then U.S. GAAP?