What’s the Difference Between IAS and IFRS? (2024)

FAQs

What’s the Difference Between IAS and IFRS? ›

Rules-based: IFRS is more principles-based than IAS, which means that it provides more general principles and concepts rather than specific rules. IFRS allows more flexibility in how companies report their financial information, while IAS provides more prescriptive guidance.

The key difference between IAS and IFRS is that IAS is the earlier version of the accounting standards, while IFRS is a more up-to-date and widely used version worldwide. IFRS provides more detailed requirements for financial reporting and covers a broader range of accounting issues than IAS.

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, but companies can apply it earlier. Changes in companies' reporting resulting from IFRS 18 will depend on their current reporting practices and IT systems. IFRS 18 replaces IAS 1 Presentation of Financial Statements.

The Board had always intended that IFRS 9 Financial Instruments would replace IAS 39 in its entirety. However, IFRS 9 permits an entity to choose as its accounting policy either to apply the hedge accounting requirements of IFRS 9 or to continue to apply the hedge accounting requirements in IAS 39.

IAS 27 required that potential voting rights be included in the assessment of control only if currently exercisable. In contrast, IFRS 10 requires that potential voting rights should be included in the assessment of control if they are substantive.

Superseded by IFRS 16 Leases. IAS 17 classifies leases into two types: a finance lease if the lease transfers substantially all the risks and rewards incidental to ownership; and. an operating lease if the lease does not transfer substantially all the risks and rewards incidental to ownership.

What are the International Accounting Standards (IAS)? The international accounting standards are a set of practices established by the International Accounting Standards Board (IASB). These practices are designed to make it simpler for businesses around the world to compare financial reporting and data.

IAS 39 was reissued in December 2003, applies to annual periods beginning on or after 1 January 2005, and will be largely replaced by IFRS 9 Financial Instruments for annual periods beginning on or after 1 January 2018.

IFRS insists on four key principles for preparing financial statements: clarity, relevance, reliability, and comparability. Clarity means making financial statements easy to read and understand.

GAAP tends to be more rules-based, while IFRS tends to be more principles-based. Under GAAP, companies may have industry-specific rules and guidelines to follow, while IFRS has principles that require judgment and interpretation to determine how they are to be applied in a given situation.

What is the main difference between IAS 17 and IFRS 16? ›

The main difference relates to the treatment of residual value guarantees provided by a lessee to a lessor. This is because IFRS 16 requires that the company recognise only amounts expected to be payable under residual value guarantees, rather than the maximum amount guaranteed as required by IAS 17.

Supersession by IFRS 15 in 2018: IAS 11, along with IAS 18, was replaced by International Financial Reporting Standard (IFRS) 15 'Revenue from Contracts with Customers'. This change aimed to provide a more robust and unified framework for revenue recognition across various sectors, including construction.

IFRS 9 requires the same measurement basis for impairment for all items in the scope of the impairment requirements. This differs from IAS 39, under which impairment is calculated differently for amortised cost assets and available-for-sale assets.

The main difference relates to the treatment of residual value guarantees provided by a lessee to a lessor. This is because IFRS 16 requires that the company recognise only amounts expected to be payable under residual value guarantees, rather than the maximum amount guaranteed as required by IAS 17.

Under IAS 18, the timing of revenue recognition from the sale of goods is based primarily on the transfer of risks and rewards. IFRS 15, instead, focuses on when control of those goods has transferred to the customer. This different approach may result in a change of timing for revenue recognition for some entities.

IFRS 7 and IAS 21 have a different conceptual basis. IFRS 7 is based upon the distinction between financial/non-financial elements, whereas IAS 21 utilises the monetary/non-monetary distinction.