In this section we will explain the most relevant aspects of IFRS and why you should take them into account.
What are International Financial Reporting Standards (IFRS)?
IFRS (International Financial Reporting Standards) were born out of the need to have the same accounting and financial language at a global level as a result of the proliferation of international finance.
These standards were developed by the International Accounting Standards Board (IASB), an independent body based in London, with the intention of achieving international standards for the advancement of the accounting function.
IFRS are the evolution of the first International Accounting Standards (IAS).
What are IFRS?
We can define IFRS as a set of financial rules that play a very important role in companies, since it is the preparation of best practices in the respective financial reporting on the performance and asset flow they generate.
We refer to the accounting methodology used to prepare these reports. There are more than one hundred countries, including Spain, that apply these standards and this helps to reinforce the transparency, balance and quality of the accounts, favouring business in a global world.
The IFRS help to increase the veracity of information, which is crucial for obtaining credit and investment opportunities for all companies, regardless of their jurisdiction. In this way, a single uniform method facilitates the provision of financial information.
What is the objective of IFRS?
The main objective of IFRS is to locate the financial situation of any company, regardless of its nationality, before starting to do business with it. Furthermore, through IFRS we can analyse the management of any company and see the veracity of the information data.
This gives an insight into the liquidity, solvency, financial risk and operational efficiency of the company in question. In this way, it provides a guarantee when carrying out financial operations.
List of IFRS
The following list sets out the IFRS standards and what they represent:
IFRS 1: First-time adoption of international financial reporting standards.
IFRS 2: Share-based payment.
IFRS 3: Business combinations.
IFRS 4: Insurance contracts.
IFRS 5: Non-current assets held for sale and discontinued operations.
IFRS 6: Exploration for and evaluation of mineral resources.
IFRS 7: Financial Instruments – Disclosures.
IFRS 8: Operating Segments.
IFRS 9: Financial Instruments.
IFRS 10: Financial Statements
IFRS 11: Joint Arrangements.
IFRS 12: Disclosure of Interests in Other Entities.
IFRS 13: Fair Value Measurements.
IFRS 14: Deferral Accounts for Regulated Activities.
IFRS 15: Revenue from contracts with customers.
IFRS 16: Leases.
IFRS 17: Insurance Contracts.
IFRS 16 and IFRS 17 have not yet been endorsed by the European Union.
IFRS for SMEs
IFRS for SMEs is a stand-alone standard designed to support the needs and capabilities of small and medium-sized enterprises, which account for more than 95% of all businesses worldwide.
IFRS for SMEs sets out the requirements for recording, splitting, coming and rediscovering that relate to imports, other situations and qualities that are important in credit statements for general note purposes.
They may also arbitrate these requirements for acquisitions, tables and classes that arise mainly in circumscribed industrial statements. IFRS are based on a conceptual framework, which refers to the internally presented knowledge of credit statements for general purpose.
The IFRS for SMEs are simpler in a number of matters such as the disclosure of certain events and activities in financial statements. Some topics have been considered not relevant for SMEs, so that they have been omitted. For example, in the IFRS for SMEs many of the principles of belief and measurement of assets, liabilities, income and expenses in the full IFRS have been abridged.
It should be noted that IFRS for SMEs is not mandatory and that the choice to apply the best option for the company is allowed.