Financial Reporting Standard: Definition, Types & Examples

By IIC Lakshya

21 Nov 2025

Others

Financial Reporting Standard: Definition, Types & Examples

Are you confused about the implementation of International Financial Reporting Standards (IFRS) for companies? It is a type of Financial Reporting Standards, which actually helps in understanding the transactions and future opportunities of the companies. Let’s explore the types, examples, purposes, and impact.

What are the Financial Reporting Standards?

All rules and guidelines that are used for the preparation of an organisation’s financial reports and statements are called the Financial Reporting Standards. They help in integrating transparency and consistency for stakeholders and customers.

Stakeholders and investors get a lot of information related to the financial conditions and status of a company. It helps them in decision-making and the effective implementation of strategies. This knowledge will also help you learn about the eligibility for IFRS certification and how you can apply.

Key Types of Financial Reporting Standards

Two very prominent Financial Reporting Standards are the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (US GAAP). We will explore them in more detail below to understand the financial performance of companies, countries, individuals, and other entities.

International Financial Reporting Standards (IFRS)

IFRS, or International Financial Reporting Standards, is one of the main types of financial reporting frameworks. Public companies follow and use global accounting rules set by the International Financial Reporting Standards (IFRS) across 168 jurisdictions. Companies practice transparency and consistency in financial reporting when they adhere to these rules. The IFRS is flexible when it comes to the principle approach.

When students pursue IFRS after 12th, they learn various aspects of the financial reporting standards. They are also taught about the implementation process so that they can have better professional opportunities.

U.S. Generally Accepted Accounting Principles (US GAAP)

Another key type of financial reporting framework is the U.S. Generally Accepted Accounting Principles. GAAP accounting is the primary set of rules and accounting rules, and standards followed in the United States. To date, it is quite strictly followed; however, the U.S. is still exploring the possibility of IFRS implementation.

Real Examples of Financial Reporting Standards

Here are some of the examples of Financial Reporting Standards implementation and what the standard actually requires. Furthermore, you can also learn about how the Company implements the standards. These standards can be learnt from the IFRS course and syllabus; hence, a student develops both educational and professional skills.

Standards	Company	What the Standards Require	How the Company Implements
IFRS 15	Vodafone	Allocation of revenue based on the standalone selling price	Revenue is split between service contracts and devices
IAS 2	Toyota	Measuring all inventories at cost (FIFO, weightage average)	FIFO is used globally
ASC 606	Apple	Allocation of transaction prices of products in a bundle	Separation of product and service obligations
IFRS 16	Adidas	Capitalization of operating leases	The balance sheet includes retail store leases

Purpose of Financial Reporting Standards

After learning about some financial reporting standards above, let us learn about the purpose of the financial reporting standards. The purposes of financial reporting reflect how significant they are concerning industry-based requirements and how the implementation of IFRS standards or GAAP principles brings change.

Transparency

Implementing financial reporting standards in a company reflects an honest representation of the company’s financial performance and position. The clear reflection of the company concerning financial decisions develops trust with customers and stakeholders.

Comparability

Applying the financial reporting standards enables investors to understand the financial conditions of the company. Investors and other stakeholders can compare the financial performance of the organisation with other companies on a regular basis. There are several career options available with high salaries when a student pursues IFRS, a type of financial reporting standard.

Consistency

With the implementation of GAAP accounting skills in a company, the financial reports and statements are consistently made. Companies can effectively prepare all statements regularly in a uniform way. There is a limited chance of distorted or misleading information with consistent production of financial statements.

Decision-Making

When companies implement financial reporting standards, it helps the management to make effective decisions. Furthermore, it also helps potential and present investors of the company to get involved in the strategies and make them effective.

Financial Reporting Standards on a Global Scale

In conclusion, Financial Reporting Standards are quite significant for organisations in recent times. It helps guide companies on how to manage resources, manage expenses, and make investments. Furthermore, it integrates transparency and accountability on the part of the companies, making it an effective process for stakeholders.

Frequently Asked Questions on What is the Financial Reporting Standard?

What are the standard financial reports?

There are four types of financial statements, namely, the balance sheet, cash flow statement, income statement, and statement of retained earnings.

What are the 5 steps of financial reporting?

The first step is to record the transactions, while the second step is posting to the ledger. Then the professional must prepare for an unadjusted trial balance. The fourth step is to integrate adjustments. The last step is creating a financial statement.

What are the 4 types of financial accounting?

The 4 types of financial accounting are tax accounting, cash accounting, management accounting, and accrual accounting.

Who is the father of accounting?

The “father of accounting” is Luca Pacioli, who was the first individual to document and publish the bookkeeping system, especially the double-entry, in his 1494 book.

What is the 4-4-5 accounting method?

One of the significant methods of managing accounting periods is the 4-4-5 Accounting Calendar. The calendar means that the first accounting period consists of the first 4 weeks in every quarter. In the second period, there are 4 weeks, while the third period has 5 weeks.

What is a balance sheet?

A financial statement is called the balance sheet, which is a summarisation of liabilities, shareholders, and assets of an organisation for a specific period of time.