What Is IFRS?

What Is IFRS?
26 Nov 2020

“IFRS/UFRS”, which is the abbreviation of the term International Financial Reporting Standards, is a set of principles that regulate the appearance of each balance and transaction in the financial statements. With IFRS, which aims to enable businesses in different countries to understand and compare each other’s financial statements, it is aimed that all businesses speak the same language in financial reporting.

Financial reports of every company using IFRS, which was made a requirement by the European Union in 2005, can be clearly understood by other persons or institutions familiar with these standards. As GTech, we shared the details about IFRS, the International Financial Reporting Standards in this article.

What Does IFRS Do?

  • Thanks to IFRS, whose main purpose is to “understand”, businesses can understand the financial reports of businesses in other countries.
  • Businesses with investments in different countries can track their investments wherever they are.
  • Since the language of the tables used is the same, it provides investors with an easier and safer investment environment.
  • It eliminates the time and labor costs of dealing with a different reporting standard for each country.
  • It allows the control mechanism to work more effectively for the company.
  • Reports prepared with IFRS are prepared in accordance with global standards, not according to the request of the person preparing. In this way; missing, incorrect or unnecessary information is prevented.

What Information Is Included in the Content of IFRS Reports?

  • Corporate financial statement table
  • Statement of comprehensive income
  • Cash flow statement
  • Statement of changes in equity (undistributed profits table)
  • Financial statement disclosures

Along with these reports, businesses are required to provide a summary of their accounting policies. The report for the last period is given with the report of the previous period, so that changes in profit and loss can be seen.

In Which Countries Is IFRS Used?

Today, more than 150 countries, especially the European Union countries, have adopted IFRS. The United States still uses its own financial reporting standards, US GAAP. Similar to the United States of America; Canada Canadian GAAP and the United Kingdom apply the national financial reporting standards called UK GAAP.

In our country, the Capital Markets Board and the BRSA, Turkey is to be implemented in accordance with the IFRS Accounting Standards, the agency has put in place attached to them.

Today, where global markets are more accessible and competition is more intense than in the past, standardization is needed in accounting and finance issues, as in many other issues. At this point, IFRS/UFRS offers great convenience and transparency for both investors and business managers.

With Moody’s Analytics Solution, you can perform risk and financial analyzes in the banking and insurance sectors and enable your business units to make faster decisions. The solutions offered by Moody’s Analytics, including IFRS 17 and IFRS 9, are used by more than a thousand businesses worldwide, with its commitment to excellence, broad perspective and focus on customer needs. You can send us your questions about GTech’s products and services using the contact form on the Contact Us page.