International Financial Reporting Standards (
IFRS) is a set of rules that businesses use to report their finances. These standards make it easier to compare financial reports from different companies around the world. It's like a universal financial "language" that is used in over 140 countries.
Each country used to have its own way of reporting its finances. It takes a lot of time and resources to adapt documents from one country's standards to another. IFRS simplifies it by creating one global standard.
For instance, IFRS requires companies to show how they calculate their assets, liabilities, revenue, and expenses. That way, investors and other stakeholders can get a full and accurate view of a company's financial situation.
That's why IFRS really matters:- Compliance with the law: IFRS is part of the Federal Tax Authority (FTA) regulations, so everyone has to follow it.
- Transparency and trust: IFRS makes sure financial reports are easy to read and understand. That helps build trust between companies, investors, and government agencies.
- Global recognition: Companies that follow IFRS demonstrate their commitment to international best practices. It helps attract global customers and investors.
- Smooth business operations: In the UAE a lot of businesses do business internationally, and IFRS makes it easier to communicate and work with global partners.