Audit and Assurance
International Financial Reporting Standards (IFRS): World-class financial reporting
Businesses looking to transact with overseas entities or expand their global footprint will need to adhere to International Financial Reporting Standards (IFRS), the financial reporting language commonly used worldwide.
Complying with the IFRS makes it easier to prepare financial statements that comply with ever-changing requirements for the likes of leasing and revenue recognition, particularly for businesses that operate in multiple countries and for larger, publicly listed companies.
It can be challenging to find accountants who are well-versed in IFRS as well as standards of their country of origin. Yet, there are advantages to complying with both, as both sets of standards encourage the kind of transparency that potential investors look for. Business owners or key decision-makers will also find it easier to prepare their financial blueprints and optimize their earning potential.
Our team prepares the following in compliance with the IFRS:
Cash flow statements
Financial statements (individual and consolidated)
Profit and loss statements
Statement of changes in equity
All over the world.
IFRS are used in 166 countries worldwide, including the Philippines as well as all G20 member countries, which are committed to upholding a uniform set of world-class accounting standards. Of the 166 countries, 144, including the Philippines, require companies to comply with IFRS.
The level of compliance varies between countries as required by their respective regulatory environments. Some countries, for example, only require certain types of companies, such as local, foreign-owned, or publicly traded to adhere to them. A separate set of IFRS applies to SMEs, which has been adopted by five G20 countries.
In mandating IFRS compliance, the various governments aim to facilitate international trade, as separate standards per country greatly complicated such exchanges for businesses working toward global expansion. While the global community has yet to achieve compliance as a whole, the world’s governments continue to work toward a universal alignment of accounting standards.
Beneficial for businesses.
More than half of the companies listed on the world’s most important stock exchanges are using IFRS. Investors are attracted to companies that use IFRS because they appreciate transparent and consistent business practices which help them make better-informed decisions about whether they should invest in a company or not.
In complying with IFRS, a business has to submit all the necessary reports such as the balance sheet and cash flow statements, as well as a condensed version of its accounting guidelines. These reports are often compared to those of the previous financial period and can lower capital and international reporting costs.
SMEs that use the IFRS specific to SMEs may find them easier to comply with than the full IFRS or their local accounting standards, as well as enhance the quality of their financial reports.