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International Financial Reporting Standards; IFRS
IFRS is the acronym for International Financial Reporting Standards. IFRS is a set of accounting standards developed by the International Accounting Standards Board (IASB). The IASB is an independent, not-for-profit organization working to establish the IFRS standards that will provide a framework for how public companies worldwide prepare and report their financial statements. Globalization has essentially resulted in the need for a set of accounting rules that would be uniform across the world.
International Financial Reporting Standards are being accepted and adopted at an accelerated rate. The IFRS standards were introduced and adopted in the European Union in as the common standard by which publicly traded companies would report their financial statements. The United States is one of several countries that have not adopted the IFRS.
The IFRS provides general guidance for the preparation of financial statements, rather than setting rules for industry-specific reporting. IFRS standards are used throughout much of the world with the notable exception of the United States, where U.S. Generally Accepted Accounting Principles are used rather than IFRS.
No one is certain if and when the United States will adopt IFRS standards. Proponents of the adoption of IFRS believe that these standards are simpler to understand and to apply that US GAAP rules. If IFRS is adopted by the United States, it will be a big step toward enhancing the consistency and comparability of public company financial statements worldwide.
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