Accounting standards for markets globally
Modern economies rely on cross-border transactions and the free flow of international capital.
Investors seek diversification and investment opportunities across the world, while companies raise capital, transact or operate in multiple countries.
Just a few decades ago, international business and investment activities were complicated by different countries maintaining their own sets of national accounting standards. This patchwork of accounting requirements often added cost, complexity and ultimately risk both for companies preparing financial statements and investors and others using those financial statements to make economic decisions.
Companies applying national accounting standards had to study the minutiae of all these standards, because even a small difference in requirements could have a major effect on a company’s reported financial performance and financial position—for example, a company might have recognised profits under one set of national accounting standards and losses under another.
Investors had to study the minutiae as well, so they could develop methods to compare financial statements prepared under differing national accounting standards as they assessed investment opportunities.
Benefits of IFRS Accounting Standards
IFRS Accounting Standards addressed these challenges by providing one common reporting language—a high-quality, internationally recognised set of accounting standards that enable companies to provide efficient, cost-effective reporting that meets investors’ needs.
IFRS Accounting Standards:
- bring transparency by enhancing the quality of financial information, enabling investors and other market participants to make informed economic decisions;
- strengthen accountability by reducing the information gap between investors and companies; and
- boost economic efficiency by helping investors to assess potential investments across the world, thus allocating capital to the most promising opportunities, and lowering the cost of capital for companies.
Worldwide jurisdictional adoption
IOSCO endorsed IFRS Accounting Standards in 2000.
Today they are in effect the global language of financial reporting, used extensively across developed, emerging and developing economies.
140+ jurisdictions now require the use of IFRS Accounting Standards for all or most publicly listed companies.
Visit our jurisdictional use of IFRS Accounting Standards page for more details.
