Do you know what IFRS are?

• IFRS are International Financial Reporting Standards
• Regardless of the size of the company, accounting is essential and there must be an accounting order

Concept

The International Financial Reporting Standards (IFRS) are the rules for presenting the financial statements of companies, whose purpose is to unify an accounting language among all countries that participate in the global market.

The process of international convergence towards a set of global standards began in 1973, when professional accounting bodies from Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and the United States agreed to form the International Standards Commission. Accounting Standards Board (IASC) which, in 2001, became the International Accounting Standards Board (IASB).

Contents

The content of the IFRS establishes the method for preparing the financial statements and its objectives. The financial statements proposed by IFRS are:

• Statement of financial position or balance sheet
• Income statement or profit and loss account
• Statement of evolution of net worth and statement of comprehensive income
• Cash flow statement
• The explanatory notes of the previous states or memory

The elements of these states are divided into five large heritage masses:

• Assets: resource controlled by the company as a result of past events from which future economic benefits are expected.
• Liabilities: current obligation of the company, arising as a result of past events, upon expiration of which the company expects to release resources that include economic benefits.
• Net worth: is the residual part of the company's assets, once all its liabilities have been deducted.
• Income: increases in economic benefits through the receipt or increase of assets or decrease in liabilities.
• Expenses: decreases in economic assets for services and goods obtained or purchased.

Functions of IFRS

Its main functions are:

1. Access international economic and business environments
2. Report in a transparent and comparable manner on financial statements
3. Unify financial language
4. Reduce costs
5. Modernize financial processes
6. Simplify the preparation of financial statements