All government bodies issue certain accounting standards or accounting systems for all companies. These contain the rules, regulations, obligations and guidelines for the companies. This makes it easier for the companies as they know how to record and present their finances and statements. it also tells them how to record other things like inventories and depreciation.
All companies, irrespective of their size are under the obligation to abide by the standards issued by the International Accounting Standards Board (IASB). The accounting standards set by the IASB are termed as International Accounting Standards (IAS). all companies are supposed to use these financial statements if their country has accepted those standards.
Talking about IAS and IFRS, both of these are basically the same things but have different meanings. IAS comprises of certain old accounting standards whereas IFRS comprises of newer accounting standards.
IAS vs IFRS
The main difference between IAS and IFRS is that IAS stands for International Accounting Standards, and these were published between 1973 and 2001 by the International Accounting Standards Committee. On the other hand, IFRS stands for International Financial Reporting Standards and these were published after 2001 by the International Accounting Standards Board.
Comparison Table Between IAS and IFRS
| Parameter of Comparison | IAS | IFRS |
| Stands for | IAS stands for International Accounting Standards. | IFRS stands for International Financial Reporting Standards. |
| Published in | The standards of IAS were published between 1973 and 2001. | The standards of IFRS were published after 2001. |
| Issued by | The standards of IAS were issued by the International Accounting Standards Committee. | The standards of IFRS were issued by the International Accounting Standards Board. |
| Rules | The IAS does not contain rules regarding identifying, measuring, presenting and disclosing of all non-current assets for sale. | The IFRS is new and contains rules regarding identifying, measuring, presenting and disclosing of all non-current assets for sale. |
| Total | The total IAS are 41. | The total IFRS are 9 |
| Contradiction | In cases of a contradiction, the principles of IAS are dropped. | In case of a contradiction, the principles of IFRS are taken into consideration. |
What is IAS?
IAS stands for International Accounting Standards. These standards have been set for a long time. They help a business to understand how specific transactions should be put in a financial statement. These accounting standards have been in practice since 1973.
These are older standards. These have been set by an independent international standard-setting body based in London, called the International Accounting Standards Board (IASB). The main goal of setting these standards was to make it simpler to compare one’s business with the other businesses all across the globe.
The other goal of setting these standards was to increase transparency, build trust, and strengthen the scope of global trade and investment. With the help of these standards, it is easier to build trust for a company in terms of financial reporting and accuracy. It helps to build accountability and efficiency in the financial market.
With the help of these standards, all investors or any kind of other participants are able to make well-informed financial decisions. They are able to make better investment decisions. It also gives an idea to analyse the risks and thus helps in the better allotment of capital. It also reduces any kind of reporting costs for businesses that operate in various countries.
In 2001 a newer set of standard came into existence. These standards have replaced the IAS. all organizations now refer to the International Financial Reporting Standards for their business.
What is IFRS?
IFRS stands for International Financial Reporting Standards. In simple words, these standards are rules and regulations that have been set up to help the businesses in their financial statements. These standards make it easier for a firms’ financial statements to be transparent, consistent and easily comparable throughout the globe.
These standards have been issued by the International Accounting Standards Board (IASB). They have been used since 2001 and are still used commonly. They help a business to understand how to keep their accounts, the proper manner to report them. These also help to define the various types of transactions, whichever have any kind of financial impact.
These IAS was revised in 2001 and were changed into IFRS so that an easier and common accounting language could be set up for all business in various countries. It is because of these standards that all the financial statements of the various businesses in various countries are consistent and reliable.
Main Differences Between IAS and IFRS
- The full form of IAS is International Accounting Standards, while on the other hand, the full form of IFRS is the International Financial Reporting Standards.
- The IAS came into existence between 1973 and 2001 while on the other hand, the IFRS came into existence after 2001.
- The IAS standards are published by the International Accounting Standards Committee while on the other hand, the IFRS standards are published by the International Accounting Standards Board.
- In case of any contradictions, the standards of the IAS are not taken into consideration and are dropped, while on the other hand in case of any contractions the principles of IFRS are taken into consideration since they are newer.
- The IAS principles do not have any rules to identify, measure, present and disclose all non-current assets for sale while on the other hand, the IFRS principles contain all the rules to identify, measure, present and disclose all non-current assets for sale.
Conclusion
In common terms, both IAS and IFRS are the same things. Both set guidelines for businesses to help them record and maintain their financial statements. Both of these help a business to maintain transparency, accuracy and efficiency in their financial statements.
However, both these differ from each other as IAS are the standards that were used prior to IFRS. IAS was between 1973 and 2001. On the other hand, IFRS are newer standards. They are a reflection of the changes in business practices. They have been used from 2001 onwards.
References
- https://www.sciencedirect.com/science/article/pii/S0278425408000926
- https://www.sciencedirect.com/science/article/pii/S1755309113000300