International Accounting Standards (IAS)
Candlefocus EditorIAS provide the basis of accounting rules and principles to state financial statements — like any other type of company statement — in order to ensure that it is understandable and reliable. In addition, IAS have a key role in the establishment of what is considered to be good and accurate financial reporting. Companies and financial institutions around the world must comply with the IAS in order to produce accurate financial statements that investors can trust.
The current implementation of IAS standards principles is the result of the IFRS Foundation’s decision in 2001 to replace the former IAS system. Since then, the IFRS Foundation has worked towards converging the system of IFRS and U.S. Generally Accepted Accounting Principles (GAAP). Despite the efforts, the US, Japan and China remain the only three major capital markets without an IFRS mandate so far.
The importance of IAS for companies trading on international markets cannot be underestimated, as it is the only option for having a unified and reliable accounting process&methods. Thanks to IAS and IFRS, investors and analysts have a clear view of the financial statements of companies, enabling them to make better investment decisions. With the increased advancement in international markets comes the potential for companies to have to comply with several different accounting standards and regulations. IAS help companies to prevent this burden, as having just one set of standards makes the process simpler.
In conclusion, International Accounting Standards (IAS) play a vital role in companies financial statements, offering consistency and reliability. While the IAS system has since been replaced by the IFRS system, both set of principles serve to unify and strengthen financial reporting from companies around the world. As international markets continue to evolve, IAS will remain as an important cornerstone for companies trading on a global scale.