Question

Why are International Financial Reporting Standards (IFRS) required? Explain the purpose
and scope of IFRS requirement with an example.

Answer 1

International Financial Reporting Standards (IFRS) are the accounting standards that have been laid down by the International Accounting Standards Board (IASB). These standards are followed across the world by non US countries. The US follows Globally Accepted Accounting Principles (GAAP).

IFRS is required to be followed because nowadays business is globalized and is spread across many countries. For example, multi national companies like Coca Cola, Sony, etc. have their business in different countries that follow different accounting standards. When these countries follow IFRS it reduces complexities and differences in the accounting process.