What is IFRS? It's Requirements, Role, and Benefits
  • Mar 31, 2024
  • Sidra Shahbaz by Sidra Shahbaz

 

What is IFRS?

The International Accounting Standards Board (IASB) created a set of accounting standards known as IFRS, or International Financial Reporting Standards. These standards are intended to give commercial affairs a common worldwide language so that financial statements from different countries may be consistent, comparable, and reliable in financial reporting practices. Alkhuzam & Co. ensures IFRS policies are implemented to enhance the transparency and quality of financial information, facilitate better decision-making, and communicate the business’s financial performance and position in the Kuwaiti and global markets.

IFRS Requirements

Even though the Kuwait has not made the adoption of IFRS mandatory for all entities. Many Kuwaiti authorities have been moving towards opting IFRS, especially for publicly listed companies and larger entities. IFRS has designed a few set of principles, standards and guidelines, here’s why it is important: 

  1. Consistency: Employing a uniform set of accounting principles and procedures for comparable transactions across all of a company's operations is mandated by IFRS.
  2. Transparency: The fundamental principle of IFRS is to present a clear and thorough picture of the cash flows, performance, and financial status of a business in the Kuwaiti or global markets.
  3. Comparability: IFRS guarantees the comparability of financial statements across various businesses, sectors, and nations.
  4. Disclosure: Under IFRS, businesses must make available any information that might have an impact on how well users comprehend the financial statements. 

The functions of IFRS

Enhancing the caliber, comparability, and transparency of financial reporting on a global scale is the main goal of IFRS. IFRS lowers the cost of generating financial statements for international corporations and facilitates investors' evaluation of the financial stability of businesses that operate across borders by offering a standardized set of accounting rules.
 

  1. Benefits of IFRS Worldwide Acceptance: IFRS is widely acknowledged and accepted globally, which facilitates businesses' international operations.
  2. Cost Savings: Organizations can reduce the expenses related to creating several sets of financial statements by adopting a single set of accounting standards.
  3. Improved Decision-Making: Investors and stakeholders can make more informed decisions thanks to IFRS, which offers more pertinent and trustworthy financial information.
  4. Increased openness: IFRS mandates that businesses give more thorough and in-depth financial statements, which increases openness.
  5. Enhanced Credibility: Creditors, investors, and other stakeholders view companies that adhere to IFRS as more reliable and credible.

 

In summary, by guaranteeing uniformity, transparency, and comparability in financial reporting, IFRS plays a critical role in the Kuwaiti and global economy. Companies can gain from better decision-making, cost reductions, and increased credibility in the eyes of stakeholders and investors by adhering to IFRS. Contact us to know more about how we could assist your business with abiding to the IFRS policies.

Reach us at: +96566162610 / +96522260014 or info@alkhuzam.com  

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