What is IFRS?

By IIC Lakshya

30 Jul 2025

A unified accounting language is vital in today’s world where businesses cross borders and operate globally and where investors demand transparency. This is precisely where IFRS (International Financial Reporting Standards) comes in handy. If you are planning to be a Chartered Accountant (CA), have a B.Com degree, or are a finance professional, knowing IFRS is of utmost importance for meeting international benchmarks in accounting and finance.

What is IFRS?

International Financial Reporting Standards (IFRS) are accounting standards issued by the International Accounting Standards Board (IASB) and adopted internationally. They aim to provide a uniform structure for issuance of financial statements, enhancing the transparency, uniformity, and comparability of the financial data all over the world.

IFRS is adopted in over 140 countries, including those in the European Union, parts of Asia, Africa, and Latin America. While the U.S. follows Generally Accepted Accounting Principles (GAAP), most of the world is covered by IFRS.

Benefits of IFRS

Origin and History of IFRS

1973: Formation of the International Accounting Standards Committee (IASC).
2001: Avoidance and the Transference of the IASC to the IASB which was the start of IFRS to replace International Accounting Standards (IAS).
Present: IASB works on revising and adding new IFRS to reflect the requirements of current international finance.

Key Objectives of IFRS

IFRS signifies much more than a set of accounting rules; it opens the door to the world's financial markets. The demand for finance professionals and consultants who understand IFRS will be inexhaustible as companies across the globe adopt these standards. Everyone from students to aspiring accountants to seasoned professionals can take a leap in their career by mastering IFRS.

The IFRS goals are:

Transparency: Financial data are precise, pertinent, and can be accessed and analyzed on a worldwide scale.
Accountability: Responsible reporting from the companies and management is maintained.
Efficiency: Reporting cost for multinational corporations is lowered.
Comparability – Investors and stakeholders can evaluate the financials of various companies across countries and industries.

Key Features of IFRS

The key features of IFRS are tabulated below:

Feature	Description
Global Consistency	Same rules for companies across countries
Principle-Based Approach	Focus on general principles and not detailed rules
Economic substance over legal form	Reflects the economic reality of transactions
Fair value measurement	Uses market-based values for assets and liabilities
Comprehensive disclosure	Extensive notes and explanations accompany financial statements

Components of IFRS Financial Statements

Statements of Financial Position (Balance Sheet)
Statement of Profit or Loss and Other Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements

These elements ensure a holistic view of a company's financial health and operations.

Why is IFRS Important?

Global Business Compatibility: Crucial for companies operating in multiple countries.
Investor Confidence: Transparent reporting increases trust and investment.
Career Opportunities: Opens global job roles in MNCs, audit firms, and finance companies.
Ease of M&A: Uniform accounting makes due diligence and consolidation simpler.