IAS vs IFRS
IAS and IFRS are standards in the accounting practice that we adhere in financial reporting. There was a need in the 1960s to standardize accounting processes and reporting in order for practically anyone to understand the financial statements of a company, as well as to stop any misrepresentation by companies in their financial statements. Thus, the IAS was born.
IAS, or better known as the International Accounting Standards, was a set of standards that dictate how a particular transaction or event should be reflected in the financial statements. The International Accounting Standards Committee (IASC) has been issuing these standards from 1973 until 2001. In 2001, the IASB took over IASC’s responsibility in setting the standards. From 1973 to 2001 there were 41 IAS issued.
When the International Accounting Standards Board (IASB) took over IASC’s responsibilities in 2001, they decided to adopt the current standards, though there were some those needed revisions, and for future standards, they were going to call them the International Financial Reporting Standards (IFRS). This change was precipitated by the need to update and refine the current concepts and standards to reflect the changes in the markets, common business practices and the economic environment.
Difference between IAS and IFRS
So how are these two different? Well, technically they are the same. IFRS, however, is current and reflective of the changes in the accounting and business practices over the last two decades. Not all of the IAS are outdated, however. In fact, to date there are only 9 IFRS issued and those IAS that were not superseded by the IFRS and other IAS are still in use. The IASB will no longer issue IAS though. Any future standards will now be called IFRS, and if they are contradictory to existing IAS, the IFRS will be followed.
The IAS and IFRS allow ordinary people like you and me get a better idea of how a company operates even if it is from another country through their financial statements. It is noteworthy that the IASB does not have the authority to force companies to use the IFRS and IAS, however the Securities and Exchange Commission or its corresponding body usually require publicly traded companies to follow them.
1. The International Accounting Standards or in short IAS are standards issued by the IASC from 1973 to 2001 that dictate how events and transactions should reflect on a company’s financial statements.
2. The International Financial Reporting Standards or in short IFRS are the current and updated version of the IAS and are issued by a new standard making body, the IASB. If there are any contradictions in the IFRS with the old IAS, the IFRS should be followed.