IFRS are designed to serve as a common global language of business affairs so that accounts of various companies are understandable and comparable across international boundaries. National accounting standards prevailing in different countries are being replaced by these International Financial Reporting Standards. International Financial Reporting Standards (IFRS) are a set of standards developed by the International Accounting Standard Board (IASB) stating how a particular transaction shall be treated or an event shall be reported in financial statements. The importance of IFRS are as follows
Importance of IFRS
Check on manipulation in financial statements: IFRS helps to keep a check on the manipulation associated with the figures related to financial statements. This encourages consistency in the recognition and measurement of financial statements.
Global harmony, uniformity, and comparability: IFRS helps the economies of the world to establish global harmony, uniformity, and comparability in the process of preparation of their financial statements.
The flow of foreign investment: The Financial Reporting Standards and Accounting Standards together create a sense of security in the minds of foreign investors which facilitates a free flow of direct as well as the indirect flow of foreign investments across the countries.
Also, Read Accounting Standards