According to the research periodically carried out by the IFRS Foundation, IFRS are a basis for preparation of financial statements for (most) public interest entities in 144 jurisdictions. Therefore, it is safe to say that they are used all over the world, with a notable exception of the USA, which uses US GAAP.
‘IFRS’ stands for International Financial Reporting Standards. Sometimes the acronym is used in a plural form: ‘IFRSs’. The IFRS Foundation and IASB prefer to use ‘IFRS Standards’, however ‘IFRS’ is used most often by accounting professionals.
Each IFRS Standard has its title and number, e.g. IFRS 2 Share-based Payment or IFRS 8 Operating Segments. Before 2003, the Standards were titled ‘IAS’, which stands for International Accounting Standards. These older Standards were not subsequently renamed, so they are still titled using the old acronym, e.g. IAS 16 Property, Plant and Equipment. Therefore, you may come across references like ‘IFRS/IAS’ when referring to Standards as a whole, but the addition of ‘IAS’ is unnecessary, as the term ‘IFRS Standards’ (or ‘IFRS’…) comprises also the older standards, that is IASs.
In summary, IFRS/IFRSs/IFRS Standards comprise (see the definition in IAS 1 paragraph 7):
– International Financial Reporting Standards;
– International Accounting Standards;
– IFRIC and SIC Interpretations (see below).
Who develops IFRS
IFRS are set by the International Accounting Standards Board (‘IASB’), which is a standard-setting body of the IFRS Foundation. IFRS Foundation is an independent organisation which aims to develop and promote IFRS.
The standard-setting process of IASB is extensive and transparent with the IASB update published after each IASB meeting. After an IFRS Standard is published by the IASB, it typically goes through an endorsement process in a given local jurisdiction, after which it is incorporated into local law.
IFRIC and SIC Interpretations
IFRS Interpretations Committee is the interpretative body of the IASB. Its main work is to address application issues and suggest official IFRS Interpretations, which are eventually approved by the IASB. These interpretations are titled ‘IFRIC’, e.g. IFRIC 21 Levies. Interpretations issued before 2003 were titled ‘SIC’ and some of them are still in force today.
In most cases, the IFRS Interpretations Committee feels that there is no need to issue an interpretation in response to a submitted enquiry. This is usually because they consider existing IFRS to provide sufficient guidance. In such a case, an agenda decision is issued that explains the position of the Interpretations Committee. These agenda decisions are available at IFRS.org and are often very helpful in resolving a specific application issue. According to the IFRS Foundation’s Due Process Handbook, agenda decisions constitute ‘explanatory material’ and ‘an entity is required to apply the applicable IFRS Standard(s), reflecting the explanatory material in an agenda decision’. After each Interpretations Committee meeting, an IFRIC Update is published with a useful summary of discussions held.
How to get IFRS
IFRS are available for registered users on IFRS.org. With a free subscription, you can access so-called ‘unaccompanied IFRS’, which include the core content of IFRS without the accompanying documents such as illustrative examples (IE), implementation guidance (IG) and bases for conclusions (BC). If you’d like to have access to full IFRS with the accompanying documents, a paid subscription at IFRS.org is required. You can also purchase a print version in IFRS shop.
As mentioned at the beginning, IFRS are required for most public interest entities in 144 jurisdictions. Typically, this means that IFRS are incorporated into local law in these jurisdictions, but these are usually unaccompanied IFRS. It’s worth noting here that the accompanying documents are not an integral part of IFRS and theoretically are not biding (IAS 8.9). For example, unaccompanied IFRS translated into all EU languages were made available in the official journal of the EU in 2008 and new IFRS, such as IFRS 16, are published once they are endorsed. However, check with your local authorities as you may be lucky and find accompanying documents available for free in your country, for example: