What is IFRS, and is it worth learning? The International Financial Reporting Standards (IFRS) are a globally recognised set of standards that can be a useful knowledge area for those working in finance.
What are some of the core benefits of becoming qualified in this area, and is it something that anyone working in the financial sector should consider upskilling in?
What is IFRS, and why is it important?
What is IFRS in simple terms? It is a set of accounting rules that are used for financial statements that ensure that documents are understandable for all parties involved, regardless of their country of origin or local financial terminology and practices.
It can form a vital part of business and finance-related deals and is a highly respected rule set that forms one of the most commonly used accounting standards globally.
Where can I use IFRS?
IFRS is used in over 160 jurisdictions and can be used by British accountants or financial executives. It’s been adopted by the EU as the standard system used by all member countries and is used in large Asian markets, such as Hong Kong, Singapore and India and also in Southern Hemisphere countries such as Australia and Brazil.
US/UK GAAP vs IFRS
IFRS and GAAP are two distinct accounting frameworks employed in various regions worldwide. While IFRS is adopted widely across Europe and many countries globally, the United States exclusively employs GAAP (Generally Accepted Accounting Principles). Notably, GAAP is governed by the Financial Accounting Standards Board (FASB), a distinct entity from the one overseeing IFRS.
In the United Kingdom, British companies adhere to UK GAAP, making it advisable for individuals working in the UK to acquaint themselves with both US and UK GAAP, in addition to IFRS, if their business ventures extend into European Union markets.
UK GAAP is very similar to US GAAP, but there are important differences that employees should be aware of when working with companies that use the alternate GAAP system to their own. However, if you are qualified in one style of GAAP, typically, the additional knowledge you’ll need to practise both will be much less than learning an entirely new set of standards such as IFRS.
Despite sharing similar objectives, there exist notable distinctions between GAAP and IFRS, underscoring the importance of acquiring knowledge in both standards for professionals operating in both American and non-American markets.
The principal disparities between GAAP and IFRS are as follows. GAAP employs a rule-based approach that furnishes specific directives, whereas IFRS relies on a principles-based model, offering more generalised guidance. Consequently, IFRS grants greater reporting flexibility. Both systems endorse the First In, First Out (FIFO) inventory cost method, but only GAAP permits the use of the Last In, First Out (LIFO) method.
Acquiring a comprehensive understanding of IFRS not only enables individuals to decipher financial reports originating from over 160 countries but also expands their comprehension beyond the confines of the United States.
Why should I become qualified in IFRS?
Becoming qualified in this area can be extremely beneficial and can help those working in finance access a greater number of exciting and lucrative career opportunities.
Allows You to Work in Other Markets
IFRS is an ideal option for those who want to work in many different markets. Although this is primarily used in the UK, it can be a good option for British financial employees, as it allows for seamless trading with all EU countries, as well as major countries around the world.
Makes You a More Attractive Candidate For Employers
For candidates that are only qualified in US and UK GAAP, you may find yourself limited when looking for work outside of the UK or US.
Another consideration to bear in mind is that for those working for American companies, only being competent in UK GAAP limits your potential to only deal with British companies. With Britain no longer being in one of the world’s biggest financial hubs in the EU, companies who want to deal with clients across the block may prefer candidates who are skilled in both GAAP and IFRS.
You Can Access Unique Advantages
The use of IFRS is about more than just preference. There are unique elements of IFRS that make it an appealing set of standards to use.
As IFRS is used by a high number of countries around the world, this means that it is a simpler set of standards to use when dealing with clients or companies from many different countries. This allows faster and more efficient processes to happen and reduces the risk of confusion or friction between different parties.
This set of standards also allows companies to notice loss faster than other systems and has a positive effect on corporate governance-related efficiency. A standardised model also helps out smaller businesses, as they can confidently understand financial documents from companies of all sizes from many countries and avoid the risk of miscommunication.
Is Becoming Qualified in IFRS Worth it?
For those who are from a background in finance or accounting or deal with financial information, taking a dedicated course in IFRS can provide the skill set and knowledge needed to apply this set of standards in a professional setting. your own pace, and get a diploma in international financial reporting after passing an IFRS exam.
How to Become Qualified in IFRS
Online IFRS courses can be completed remotely in less than a week. Getting you up to speed in this area is a short time frame. Courses like these are ideal for financial staff who need an introduction to IFRS, financial staff who wish to develop a greater understanding of the concepts and applications of IFRS or analysts and non-financial staff who need to understand IFRS but are not necessarily practitioners.
With short courses in this area being simple and straightforward to book, organise and complete, an IFRS qualification can be a high-value, low-risk tool for an individual’s career development in the finance sector. Passing an IFRS and getting an IFRS certification can be a simple process for finance professionals and accounting professionals.
Online courses can allow you to follow a self-study schedule, learn at your own pace, and get a diploma in international financial reporting after passing an IFRS exam.