What is the difference between IAS and IFRS? Are both applicable in practice?
International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) are both sets of accounting standards developed by the International Accounting Standards Board (IASB). However, there are some differences between IAS and IFRS, including:
- Coverage: IAS only covers a limited range of accounting topics, while IFRS covers a broader range of accounting topics.
- Development: IAS were developed by the predecessor organization of the IASB, while IFRS were developed by the IASB itself.
- Status: IAS were issued before the development of IFRS and have since been replaced by IFRS. IFRS is the current set of accounting standards used by companies in many countries around the world.
- Nomenclature: IAS had a different nomenclature and numbering system from IFRS. For example, IAS 17 was the old standard for leasing, while IFRS 16 is the current standard for leasing.
- Substance over form: IFRS places more emphasis on substance over form compared to IAS. This means that IFRS requires companies to reflect the economic substance of a transaction, even if it differs from its legal form.
In practice, BESIDES THE EXISTING IAS, THE PREVIOUS IAS ARE no longer applicable as it has been replaced by IFRS.
IFRS is the globally recognized set of accounting standards used by many companies around the world, and its adoption is mandatory or permitted in many countries. Companies that previously used IAS are required to transition to IFRS.