An internationally recognised set of accounting and financial reporting principles for creating and presenting financial statements is known as IFRS, or International Financial Reporting Standards. It guarantees consistency in accounting procedures so that financial records are comparable between various reporting organisations worldwide. It has changed over time to become the new global accounting standard.
Recognising objectives of IFRS
Financial statements are designed to give information about a company’s performance and financial situation so that current or potential stakeholders can make informed financing decisions. A company’s website also serves as its main customer communication channel.
Therefore, the data provided in the records must be pertinent, trustworthy, correct, and comparable. As a result, companies began adhering to regionally recognised accounting standards. In spite of this, due to the lack of uniformity in their accounting procedures, comparing various enterprises across nations became challenging. As a result, businesses were forced to create multiple sets of financial statements for different regulatory bodies.
The demand for a global accounting framework grew as multinational corporations established operations in many nations. IASB was created as a result of it. As it promotes the free flow of capital, it is approved globally. To put it another way, any American investor will feel more comfortable investing in an Indian company after carefully reviewing the financial records created by this accounting standard. This means that accounting risks connected with such investments are eliminated by adhering to internationally recognised standards.
But remember that American businesses must follow GAAP due to government regulations. Due to this, when it comes to compliance, there is frequently a heated argument between IFRS and US GAAP. In contrast to GAAP, IFRS is extensive and flexible. Its principles are flexible because they are founded on general principles. But when it comes to maintaining financial accounts, uniformity and transparency are shared objectives of IFRS and GAAP.
A framework for international financial reporting is provided by the (IFRS) International Financial Reporting Standards. The following are some of its primary financial objectives of IFRS:
Objectives of IFRS: Establish Common Law
To bring everyone on the same page, one of its main objectives of IFRS is to ensure that common law is introduced and adopted by the most significant number of jurisdictions and nations. In addition, it ensures that everyone follows the same rules and uses a standard format for reporting company activity.
Objectives of IFRS: Guidelines and Principles
According to IFRS accounting rules, the companies conduct their entire operations and report their financial data and information. They risk punishment if they don’t comply. As a result, it guarantees a company’s reliability.
Objectives of IFRS: Encourages Decision-Making
By giving a comprehensive image of company reports and financial statements, the standards assist investors in making informed decisions about their investments. Moreover, it is feasible due to its unique and universal language, which is simple to understand.
Objectives of IFRS: It boosts the economy.
Investors are more willing to invest in businesses having objectives of IFRS-compliant financial records globally. Again, this is because such reports are taken to be reliable, intelligible, and comparable. This trustworthiness facilitates foreign investment into the economy and opens.
Importance of objectives of IFRS
It is a global accounting standard and crucial to many nations and the global economy. The significance is as follows:
Transparency
It promotes accountability and transparency in the financial statements produced by large and small businesses and government organisations. As a result, it reduces the room for error, manipulation, and irregularities concerning holdings, transactions, and balances. Additionally, it promotes accuracy and uniformity in work.
Consistency and Comprehensiveness
The International Financial Reporting Standards aim to establish consistency in the presentation and clarity of financial statements. When everyone adheres to and accepts the standards, it is simple for businesses and government organisations to adhere to a single rule that enables global economies to compare their growth in detail.
Security and flow
It aims to achieve a security level for direct and indirect foreign investments across nations, maintains information about funds, and aids in tracking the flow of transactions. This accounting standard is crucial when dealing with significant assets or engaging in large transactions.
Accountability
Filling the gap left by inadequate financial reporting improves accountability. However, corporations risk penalties if they fail to comply with it. For instance, last year, the Johannesburg Stock Exchange punished the sugar company Tongaat Hulett Ltd… This is because the company’s financial statements, account reports, and other vital elements were inaccurate and did not follow objectives of IFRS.
Objectives of IFRS: career prospects
These days, objectives of IFRS is highly sought after because most companies recognise its objectives of IFRS and utilise them in their financial reporting.
- Finance professionals who get an IFRS certification are at an advantage over others since they have a deeper understanding of the worldwide accounting standards required by all firms.
- Because objectives of IFRS is widely recognised worldwide and has a broad scope, certified individuals can work in more than 100 nations.
- Since all of these adhere to the objectives of IFRS principles, IFRS-qualified individuals are in high demand in industries like banking and insurance, as well as non-banking financial firms and listed corporations. The top IFRS consultants are constantly needed.
- IFRS experts can launch their consulting businesses by helping businesses analyse their financial accounts correctly.
- Additionally, it enables them to work as an IFRS trainer for numerous reputable colleges and the financial education sector.
We can therefore see that IFRS has career growth opportunities in this cutthroat environment. Due to the ongoing updating and revision of IFRS norms, this demand will only increase. In addition, a sector that is rapidly expanding daily is finance. Demonetization, the sales and services tax, and other efforts took periodically by the government highlight the necessity of keeping up with the financial world. Therefore, we conclude that objectives of IFRS is a rising global accounting icon in all the fields.
Objectives of IFRS: Capital and Capital Maintenance Theory and Concepts
It’s an essential idea for all businesses. Profits are income after all expenses have been paid or any excess payment over what is required to sustain capital. The concept of capital maintenance for any firm will be described using the following conceptual framework:
According to this notion, a company’s financial net assets after a year must be equal to or greater than its net financial assets at the beginning of the period, disregarding any dividends and contributions from the owner during that particular time for a profit to be achieved. Therefore, measuring the upkeep of financial capital in either nominal monetary units or units of constant purchasing power is appropriate.
The maintenance of physical capital is a notion with its significance. In this, a profit is only realised when, after deducting all distributions and contributions from owners during that time, the physical productive capacity, also known as the operating capacity, of the company at the year’s end exceeds its physical functional capacity at the beginning of the year.
Where to learn?
The IFRS Courses offered by Henry Harvin Finance Academy are widely regarded as the best IFRS Courses in India. The curriculum produces for the ACCA-Diploma in IFRS Courses. Students can pursue a promising and well-established career in finance and accounting by taking Henry Harvin’s IFRS Course, which prepares them for the IFRS exam the Association of Chartered Certified Accountants gives. Additionally, these IFRS Courses demonstrate to aspirants the main distinctions between IND-AS and objectives of IFRS.
Details of the course
- 20 hours of recorded training sessions and 60 hours of interactive online training
- This one-of-a-kind “9 in 1 course” includes instruction, projects, internships, certification, placement, boot camps, hackathons, access to online learning, and a year of special gold membership at Henry Harvin Finance Academy.
- Even after finishing the course for a year, Henry Harvin offers a 100% placement guarantee.
- Guaranteed assistance with internships to gain real-world experience
- Upon successful completion of the course, Henry Harvin Finance Academy will award you a Course Completion Certificate of ACCA Dip. IFRS Training.
- For the following 12 months, you’ll get access to numerous Boot Camps and hackathons.
Benefits of Learning
- an opportunity to learn more about the framework for international financial reporting.
- Be familiar with the complexities of interim financial reporting.
- Discover the most crucial financial reporting standards and how to use them while creating financial reports.
- Get to grasp financial instruments and operation segments inside and out.
- Find out how to produce financial accounts for a group of businesses.
- Learn how to use disclosure guidelines while analysing financial reporting for a corporation.
- Learn how to calculate earnings per share and prepare financial statements.
Who should enrol in this course:
This course is advised for anyone looking to improve their financial literacy and land a job with a major multinational corporation (MNC) in the banking or insurance industry. Candidates who have earned an MBA in finance or accounting, are chartered accountants, company secretaries, cost and works accountants, certified financial planners, chartered financial analysts, or have completed any other relevant course in accounting and finance can advance their knowledge and skill by enrolling in specialised courses and training programmes in international standard accounting and become IFRS experts working for renowned companies and organisations. They can take advantage of the numerous opportunities both domestically and overseas.
Objectives of IFRS
- To create qualitative, trustworthy, universally embraced standards solely based on principles for the benefit of the public.
- Additionally, it intends to ensure comparability and openness in financial reporting, which will aid shareholders, investors, and everyone participating in the capital market in reaching wise monetary judgments.
- Meets the objectives of IFRS of small and medium-sized businesses about the display of their financial accounts and making informed judgments.
- The most accurate assessment of the economic resources.
IFRS speciality courses: The following methods are suggested for learning the objectives of IFRS protocols:
- The ICAI offers a 100-hour certificate programme for chartered accountants in international financial reporting standards.
- For university faculty, students, cost accountants, chartered accountants, company secretaries, and senior and middle-level position executives working with various MNCs and other organisations, ICWAI will offer a certificate course on the convergence of international financial reporting standards within two months.
- For working professionals with two years of experience or more, KPMG offers an advanced certification programme on IFRS that lasts six weeks. The experience is not required for the MBA, CA, CWA, or CS.
- ACCA offers a diploma in international financial reporting for graduates with three or more years of experience in finance, commerce, postgraduate or master’s degree holders with at least two years of experience in finance, auditors, and other financial professionals in three to six months.
Conclusion
The objectives of IFRS is to increase global comparability, standardisation, and transparency of financial statements of publicly traded companies. Regardless of the country of origin, IFRS ensures greater business transparency by bringing integrity and uniformity to a company’s financial statements. Additionally, because they have a complete understanding and knowledge of international accounting standards, experts certified by the International Financial Reporting Standards (IFRS) have an advantage over financial professionals who are not qualified.
Recommended Reads:
List of International Financial Reporting Standards
What is the status of Applicability of IFRS in India
FAQ’s
Ans. IASB was established in 2001 to develop IFRS. It created and released its first set of guiding principles in June 2003.
Ans. It is based on approved accounting standards that 144 different governments have adopted. It is a manual on clearly presenting financial data and statements to understand and compare.
Ans. International Financial Reporting Standards is how they are formally known. Its goal is to ensure transparency, consistency, growth, and interest in public services through effective, efficient, and accurate reporting of financial accounts using standard accounting principles.
Ans. Professionals need to enrol in IFRS Courses in India because it is used in at least 120 nations worldwide. Indian organisations gradually organise for current employees to learn IFRS standards and hire new workers with IFRS experience to improve the firm’s integrity and transparency.
Ans. The following professionals in India ought to take an IFRS course:
Accounting and finance experts, practising Chartered Accountants, and Cost and Management Accounting (CMO) consultants
Postgraduates as well as graduates
Semi-qualified CAs who work in the accounting and finance department
Finance-related executives (CFO)
Directors of Finance, Chief Accountants, and Finance Managers
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