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Frequently Asked
Questions
on IFRS
Here’s a list of FAQs on IFRS
The purpose of IFRS is to bring harmony in the accounting language and bring ease in doing business internationally by standardising financial reporting across the globe and accordingly making it easier for investors, regulators, and other stakeholders through the financial statements which are reliable, transparent and comparable even from different organizations from various countries.
The IFRS Interpretations Committees issues ‘Interpretations’ which carry the same authority as IFRS Accounting Standards, in the sense that they set out consensus views that entities must adhere to if they describe their financial statements as being prepared in accordance with IFRS Accounting Standards.
Interpretations are applicable from the date of issue or if they specify one, from their effective date. Some Interpretations may contain ‘transitional provisions’ that apply to their first application.
An interpretation then ceases to apply when it is overridden by a new IFRS Accounting Standard (or other authoritative IASB document). When this happens, this would be mentioned in the Exposure Draft of the new, overriding IFRS Accounting Standard (or another document). The IASB would then inform the IFRS Interpretations Committee when this happens.
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Whether IFRS is mandatory depends on the jurisdiction. In many countries, IFRS as a reporting framework is required for publicly accountable companies, either in as is form (adoption approach) or local reporting framework based on IFRS (conversion approach). Few countries may allow their companies to choose between IFRS and local GAAP considering their public accountability status.
IFRS provides guidance on 5 key accounting principles with respect to 5 elements of the financial statements (income, expenditure, assets, liabilities and equity) as below:
- Recognition (when to record a transaction in FS?)
- Measurement (upon recognition at what amount it is to be measured initially and also subsequently, if applicable?)
- Presentation (where to present the transaction in the FS?)
- De-recognition (when to take out the asset or liability out of the FS?)
- Disclosures (which descriptive notes are mandatory for interpretation of a transaction?)
If you are a finance professional who is not already knowledgeable about the details of International Financial Reporting Standards (IFRS), this qualification has a fast and efficient solution to meet your needs. If you need to develop a working knowledge of the area, the DipIFR can help prepare you.
This course is designed to develop your knowledge and understanding of International Financial Reporting Standards. You will also learn how to apply them, as well as the concepts and principles which underpin them.
On completion of the Diploma candidates should be able to:
- understand, explain and apply the IASB's Conceptual Framework for Financial Reporting
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- apply relevant financial reporting standards to key elements of financial reports
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- identify and apply disclosure requirements for companies in financial reports and notes
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- prepare group financial statements (excluding group cash-flow statements) including subsidiaries, associates and joint arrangements.
The Diploma in International Financial Reporting (DipIFR) provides qualified accountants or graduates who have relevant country specific qualifications or work experience with an up to date and relevant conversion course. The Diploma provides practical and detailed knowledge of the key international financial reporting standards and how they are interpreted and applied.
IFRS 15 is revenue from contracts with customers which establishes the principles for recognizing revenue. It provides a single five-step model for revenue recognition, irrespective whether contract is for sale of goods or services or construction contracts or composite contracts. The core principle of IFRS 15 is to recognise revenue to depict the transfer of performance obligation by transferring control in the goods or services promised to the customer. It is outcome of a joint project between IASB and FASB (apex body for US GAAP). Thus, revenue standard under IFRS and US GAAP is exactly same. Reporting standard corresponding to IFRS 15 under US GAAP is ASC 606 – Revenue from contracts with customers. Standard was introduced in the year 2014 and is mandatorily applicable from 1 January 2018 onwards.
IFRS 17 is the standard for insurance contracts. It establishes principles for the recognition, measurement, presentation, and disclosure of insurance contracts issued. It aims to increase transparency and comparability in financial reporting for insurance companies. This standard will replace IFRS 4 and applicable mandatorily from 1 January 2023 globally.
Industries that often require IFRS expertise include:
- Banking and Financial Services Sector
- Auditing and Consulting Firms (including the Big Four)
- Insurance Companies
- Multinational Corporations
- KPOs / BPOs working in accounting back offices
- Investment Firms and Asset Management
- Public Sector and Government Agencies (for regulatory compliance)
IFRS specifies how companies must maintain their records and report their expenses and income. Effectively, they act as a common, consistent accounting language. One that can be understood by investors, auditors, government regulators, and other stakeholders around the world. Moreover, an IFRS audit ensures that financial statements present accurate and clear information, free from material misstatements, thereby improving transparency and providing stakeholders with reliable financial data.
External auditors at global firms like PwC, Deloitte, EY, and KPMG use IFRS to audit companies' financial reports, while internal auditors in multinational organizations ensure ongoing compliance.
As per the survey by IASB, more than 140 countries mandate or allows the use of IFRS for the financial reporting purpose of their publicly accountable entities. This includes the European Union, many countries in Asia and Latin America, and Canada etc. In U.S.A., they use US GAAP (Generally Accepted Accounting Principles) for financial reporting purposes of the publicly listed entities. However, U.S. allows foreign private issuers to present their financial statements using IFRS for reporting purposes.
IFRS is a reporting framework which is widely accepted across the globe. However, US GAAP is a reporting framework which is accepted mainly in the US or by US Companies. Amongst the other differences, one of the prominent difference is that IFRS is principle-based reporting framework, while US GAAP is more rule-based.
IAS - IAS 1 - 41: Total 24 standards (Few standards in between are deleted)
IFRS - IFRS 1 – 17: 17 standards
Interpretations: IFRS IC: 15 and SIC: 5
Total 41 standards and 20 interpretations.
international consultation involving accountants, financial analysts and other users and regulatory bodies from around the world.
The overall agenda of the IASB will initially be set by discussion with the IFRS Advisory Council. The process for developing an individual standard would involve the following steps:
STEP 1:Â Â Â Â Â Â Â Â Â During the early stages of a project, the IASB may establish an Advisory Committee to give advice on issues arising in the project. Consultation with the Advisory Committee and the IFRS Advisory Council occurs throughout the project.
STEP 2:Â Â Â Â Â Â Â Â Â IASB may develop and publish Discussion Papers for the public comment.
STEP 3:Â Â Â Â Â Â Â Â Â Following the receipt and review of comments, the IASB would develop and publish an Exposure Draft for public comment.
STEP 4:Â Â Â Â Â Â Â Â Â Following the receipt and review of comments, the IASB would issue a final IFRS Accounting Standard.
The period of exposure for public comment is normally 120 days. However, in exceptional circumstances, proposals may be issued with a comment period of 30 days. Draft IFRS interpretations are normally exposed for a 90-day comment period.
IFRS standards are updated periodically by the IASB to reflect changes in economic conditions, evolving business practices, and to clarify or refine existing standards.
Principles given above are to be interpreted with the help of below mentioned guidance in an accounting standard under IFRS:
- Bare text – It is provided in bold and plain font, both having equal prominence.
- Application guidance – How to apply a articular provision is explained in this section.
- Basis of conclusion – Rationale of framing particular provision in certain manner.
Illustrative examples
Yes. As more companies are adopting IFRS standards which is increasing the demand for trained professionals, in many areas, including accounting, auditing, consulting, and advice services Over 140 countries have adopted IFRS, which means there are more job opportunities worldwide for those who are certified. Also, the transition to IFRS is complex and time-consuming, so companies need highly skilled professionals to help with implementation
If you are a professional accountant or auditor who works in practice or business, or a member of an IFAC membership body, then you are eligible to take the DipIFR qualification or if you are a Chartered Accountant holding valid membership certificate.
If you do not meet the conditions above, you may still be eligible. You will need to prove that you have one of the following:
- A relevant degree (B.Com. / M. Com.) plus two years’ relevant accounting experience*
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- An ACCA certificate in IFRS plus two years’ relevant accounting experience*
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- Three years' of relevant accounting experience
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- ACCA affiliate status
Note – * By submitting the experience letter in a specified format. (CA Articleship experience of 2 or 3 years may be considered relevant for work experience criteria).
IFRS 9 is the accounting standard for financial instruments. It covers the recognition, initial measurement, classification for subsequent measurement, subsequent measurement, impairment, and hedge accounting of financial assets and liabilities. It replaces IAS 39. It was introduced in the year 2014 and mandatorily applicable from 1 January 2017 onwards.
IFRS 16 relates to accounting for leases. This reporting standard is also an outcome of a joint project between IASB and FASB. However, there are few difference between IFRS 16 – Leases and ASC 842 – Leases. Under IFRS 16, lessee accounting differs completely from its previous standard, IAS 17 – Leases. IFRS 16 requires lessee to recognise all leases to be recorded on their balance sheet as Right of Use (ROU) asset with corresponding Lease liability. Lessor accounting remains largely same as previous standard with classification between finance lease and operating lease. Because of this change, lessor and lessee accounting now will not be mirror accounting anymore. Standard was introduced in the year 2016 and is applicable mandatorily from the year 1 January 2019 onwards.
Yes, IFRS is crucial for accountants aiming for international careers, especially in multinational corporations and in countries that have adopted IFRS for financial reporting purposes. Understanding IFRS opens doors to work across borders and enhances opportunities for global career in accounting and finance.
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