Describe the International Financial Reporting Standards

International Financial Reporting StandardsNameInstitutional AffiliationDate
International Financial Reporting Standards
International Financial Reporting Standards refer to a single set of accounting standards which are developed and maintained by the International Accounting Standards Bureau. They state how transactions and events should be reported in the financial statements. The standards help to achieve a common accounting language across the globe thus promoting a good understanding of accounting language from one company to the other or from one country to the other CITATION Fos09 \l 1033 (Fosbre, Kraft, & Fosbre, 2009). The standards are applicable to the developed, emerging and developing economies. They are mostly used by the investors to compare the financial performance of public companies with their international peers.
The standards are used in more than one hundred countries that include the European Union. However, the use of IFRS in the European Union has affected the financial reporting of US companies that have relationships with the other foreign entities. Most of the companies are located in countries that require them to use the IFRS method. The method that is used in the US is the GAAP (Generally Accepted Accounting Principles). There is a difference that exists between IFRS method and the American Standard method. IFRS on one side is not very strict on defining and therefore it allows companies to give reports about revenue sooner. A balance sheet under this system may, therefore, show higher sources of income CITATION Kim12 \l 1033 (Kim, 2012). Expense requirements for IFRS are not the same as those of the American Standards. If a company is spending money on development or future investment, it is not reported as an expense.
Most of the growing jurisdictions require public companies to make use of the IFRS during the stock exchange listing. Banks, insurance companies, and stock brokerages use to make reports. The increase in the use of IFRS is not l...