International Financial Reporting Standards

International Financial Reporting Standards (IFRS), often known by the older name of International Accounting Standards (IAS) are a set of accounting standards. They are issued by the International Accounting Standards Board (IASB). The standards that form IFRS are known as either International Accounting Standards (IASs) or International Financial Reporting Standards (IFRSs) depending on when they were published.

Adaptation and convergence

IFRS is used in many countries in the world, including Hong Kong and Russia, and is also used in certain European countries

European Union

IFRS was given a boost in 2002, when the European Commission issued a regulation that all listed companies in Europe must adopt IFRS by 2005 for their consolidated accounts (as opposed to the firm's individual accounts). Many member countries within the European Union have made the accounting regulation more restrictive by requiring private companies to comply with IFRS.

United States

The accounting standard in United States has been US Generally Accepted Accounting Principles created by the US Financial Accounting Standards Board. In late 2002, IASB and US FASB issued a joint statement that they will work toward the eventual convergence of two standards. Securities and Exchange Commission is in the process of analyzing differences between IFRS and US GAAP.

Hong Kong

In Hong Kong, HK GAAP is more restrictive than IFRS due to regulatory laws. HK GAAP only deviates from IFRS in minor instances. Therefore, many companies complying with HK GAAP are already IFRS compliant. HK GAAP is moving towards full convergence with IFRS in 2005.

People's Republic of China

In People's Republic of China, the standard used for accounting is PRC GAAP , which is required by law. The accounting requirements for publicly-traded companies in China differ based on the type of company:

• A-share companies are companies trade in Renminbi and inaccessible to foreigners.
• B-share companies are companies trade in a foreign currency and accessible to foreigners.

Because foreign investors have access to B-share companies, all B-share companies are required to file also in IFRS. This requirement is also extended to A-share financial companies.

Details

IFRSs are considered a "principles-based" set of standards, in that they establish broad rules rather than dictating specific treatments. As of 2002 a number of IFRSs offer the preparer choices of treatments; the IASB's Improvements Project is seeking to reduce these choices.

International accounting standards currently in use are as follows:

• IAS 16: Property, Plant and Equipment
• IAS 22: Business Combinations
• IAS 28: Investments in Associates
• IAS 36: Impairment of Assets