Guide To The Objectives of IFRS in 2022 (objectives of IFRS)

The Objectives of IFRS

Are you looking for IFRS courses in India? Would you wish to widen your professional dimension by pursuing overseas job opportunities? First, know the objectives of IFRS.

IFRS stands for International Financial Reporting Standards. It provides a set of rules and guidelines that every firm has to follow to ensure their financial statements are consistent with other firms worldwide. 

These rules guide a company’s procedure for recording a transaction in the accounting books. However, using IFRS helps ensure the accounting statements’ transparency and credibility. And this permits the third parties to make preferences by analyzing these financial records.

IFRS directs that all companies follow the same rules and standards in preparing their financial statements. It creates uniformity in the financial statements across firms and countries. Because of this, it gets simple to evaluate the numbers of financial statements of two or more companies at a time. 

The company’s benefit is that investors are more likely to trust and invest in transparent companies that follow standard accounting and disclosure norms.

Some of the significant objectives of IRFS are

1. Create a Universal Law

One of its main objectives is to check that common law is introduced and adopted by more and more countries, So that it becomes possible to bring everyone on the same page. Moreover, it affirms that everyone follows the same guidelines and adopts a universal way of reporting business activities.

2. Reliable Representation

 The budget reports present all the data a client expects to get an accurate image of an organization’s outcomes, monetary status, and incomes. It also expresses that no information is left out, leading a client to generate a negative impression of the company. 

The financial statements should be authentic and error-free so that the information they include gives an accurate picture of the company. If unchecked “errors” happen over time, which tends to spoil the outcomes of financial statements, it is termed financial reporting fraud.

3. Support analysis

IRFS aids stakeholders in studying a company’s performance and explaining its financial position. It helps in arranging and reporting financial data with accuracy and consistency. Therefore such financial records provide inclusive documents and help decision-making.

4.  Quality

The term “quality” is used in the IFRS to refer to firm attributes that estimate business success and growing stock prices. So, quality has become a common factor related to value and scale as a sign of corporate success.

5. Assist in the preparation of reliable financial records

One of the objectives of IFRS( International Financial Reporting Standards) is to make the data presented in the books of accounts accurate, reliable, uniform, and appropriate by following the rules. The high quality of financial records guides investors in making briefed economic decisions.

6. Easy to Comprehend 

One of the Objectives of IFRS (International Financial Reporting Standards) is to make accounting straightforward. Therefore the idea is to make financial data easily comprehended by the readers. 

Through this, the reader believes in having a basic understanding of business, but sophisticated business knowledge is not necessary to achieve a high degree of comprehension.

7. Enforacable

Enforcement is known as  “compliance analysis” of the financial information given by a company to guarantee that accounting rules are followed. Thus, Enforcement is one of the essential Objectives of IFRS.

8. Access to foreign capital in terms of investment

IFRS specialists proficient in these principles are in high demand due to accountants’ constant changes in the standards. For Indian bookkeeping specialists, IFRS adoption is the same as programming expertise. 

Hence, Financial bankers worldwide are urged to donate, receiving more unconventional finances.

9. Maintaining consistency

Consistency is one of the objectives of IFRS. It maintains that activities and occurrences are documented consistently from one reporting year to another. 

Thus, the Consistency Principle states that once your business, or your bookkeeper or accounting department, follows an accounting principle,  it must continue to follow the technique regularly in the future.

10. Transparency

Transparency in IFRS means the economic reporting process in which businesses disclose their financial information to the public. Moreover, It induces standard accounting information like income statements, accounting records, cash flow statements, and retained earnings. 

 With transparency and discouraging insolvency, managers can participate in creative accounting procedures. Further, the introduction of IFRS could help enrich financial disclosure informativeness.

11. Flexibility

Financial flexibility is a phrase that informs a company’s scope to respond to unforeseen expenses and investment possibilities. At the same time, flexibility is measured by the company’s leverage and cash holdings. 

Further, International Financial Reporting Standards (IFRS) allow categorized interest paid, interest received, and dividends received as operating, investing, or financing activities within the statement of cash flows. So this is one of the objectives of the IFRS.

12. Standardization of accounting and financial reporting

Standardization supports innovation by providing standardized processes and reliable data, reducing invention time. It also makes sharing ground-breaking ideas and knowledge about cutting-edge techniques easier. 

Thus, Revenue recognition, asset classification, permitted techniques for depreciation, lease classifications, and outstanding share measurement are examples of accounting standards.

Who can pursue IFRS in 2022?

  • In International Financial Reporting Standards, accountants are among the most prestigious and respected professions. Moreover, the IFRS certificate program is designed to help you better grasp the International Financial Reporting Standards (IFRS).
  • This course will guide you clear your IFRS test. Knowledge of the difference between Ind-AS and DipIFR while studying for the DipIFR exam.
  • Accountants, ICWAs, Company Secretaries, and other financial experts can enroll in this course.
  • Finance managers and in-charge accountants can also start their careers in this field.
  • MBAs have work experience in the auditing business and finance background, so they apply for it.
  • As semi-qualified CA, ICWA and CS must enroll in IFRS courses.

Conclusion

More than 120 nations have given IFRS the green light in their accounting field. Therefore experimental data on the universal principles will open doors for IFRS assured experts worldwide. 

Consistent changes in these standards by accountants have created a demand for IFRS specialists who thoroughly understand these concepts. Regardless of the country of origin, IFRS provides greater business transparency by bringing integrity and uniformity to a company’s financial statements.

 Moreover, they have a complete understanding and knowledge of international accounting standards. And experts certified by the International Financial Reporting Standards (IFRS) have benefits over financial professionals who are not qualified.

FAQs

1. What is the difference between GAAP and International Financial Reporting Standards (IFRS)?

Ans: In simple terms, it can be differentiated as follows
 1. GAAP is a rules-based accounting system, whereas IFRS is a standards-based accounting system.
 2. The IFRS’ fictional structure and standards provide more room for translation than the GAAP.

2. How much an IFRS professional should be the salary?

Ans. Annually, they should get between 24 lakhs and 50 lakhs.

3. The IFRS is based on what?

Ans: It is based on standard accounting principles and procedures adopted by 144 jurisdictions. It is a guideline on reporting financial statements and data that is easy to understandable and comparable with one another.

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