Frequently Asked Questions on IFRS

Preface

Financial reporting has become more and more complex over the years. The ways in which many industries around the globe reported financial information, based on domestic Generally Accepted Accounting Practices (GAAP), differed significantly from one country to another because a set of accounting rules in one country may not be the same for a reporting entity operating in a similar industry but in another jurisdiction.

International Financial Reporting Standards (IFRSs) are primarily designed to enhance uniform financial reporting around the globe, promoting consistency, harmonization and comparability. The idea behind this uniform financial reporting is that it will give access to more capital markets because of the consistency in the way that financial information is both prepared and reported.

Mainstream IFRS are primarily designed for large entities that are listed on a recognized stock exchange (for example, the London Stock Exchange). As a consequence, mainstream IFRSs are extremely vast and significantly complex in many areas, and require a reporting entity that has adopted IFRS as its financial reporting framework to make extensive disclosures within its financial statements. This can result in a company's annual report running to hundreds of pages.

The introduction of the International Accounting Standards Board's (IASB's) IFRS for SMEs in July 2009 was a big step in promoting an international-based framework for those companies that mainstream IFRS would prove ...