International Financial Reporting Standards (IFRS)

What is IFRS (International Financial Reporting Standards)?

The IFRS (International Financial Reporting Standards)are international accounting standards designed to standardise the presentation and interpretation of financial statements throughout the world. They aim to make financial information more transparent, comparable and useful for investors, management and business partners.

The role of the IASB

IFRS are developed by the IASB (International Accounting Standards Board), an independent body based in London.

The IASB's mission is to:

• To establish high-quality standards;

• To ensure their global consistency;

• And to publish regular updates to reflect economic, financial and regulatory developments.

IFRS vs IAS: a historic transition

Before IFRS, international accounting standards were known as IAS (International Accounting Standards).

In 2001, the IASB took over the governance of these standards and launched a new generation of standards under the IFRS label.

• The former IAS standards remain applicable where they have not been superseded.

• IFRS now form the modern and evolving basis of international accounting standards.

This development reflects a desire to standardise, modernise and harmonise accounting practices in a globalised economic context.

Who must apply IFRS?

In Canada and Quebec, the adoption of IFRS depends on the status and needs of the organisation:

• Listed companies: mandatory application of IFRS since 2011 to meet the requirements of financial markets and ensure international comparability.

• Consolidated groups: application required when a group entity is listed, in order to harmonise financial presentation and facilitate consolidation between several subsidiaries.

Some unlisted organisations adopt IFRS on a voluntary basis, in particular when they :

• Are experiencing strong growth;

• Preparing for an IPO;

• Desire to attract foreign investors;

• Need to align with the accounting practices of an international parent company;

• Want to improve the quality and readability of their financial statements during mergers or acquisitions.

For SMEs and certain NPOs, IFRS are generally not mandatory. The ASPE, which are simpler and less costly, are often sufficient. However, adopting IFRS may become relevant when an organisation :

• Projects itself internationally;

• Must meet increased transparency requirements from lenders;

• Preparing a major transaction (sale, merger, acquisition);

• Wants to strengthen the comparability and credibility of its financial information.

List of IFRS standards

Discover the complete and updated list of IFRS standards and their implications:

1. IFRS 1 - First-time adoption of International Financial Reporting Standards

2. IFRS 2 - Share-based payments

3. IFRS 3 - Business combinations

4. IFRS 4 - Replaced by IFRS 17 from 1 January 2023

5. IFRS 5 - Non-current assets held for sale and discontinued operations

6. IFRS 6 - Exploration for and evaluation of mineral resources

7. IFRS 7 - Financial instruments: disclosures

8. IFRS 8 - Operating segments

9. IFRS 9 - Financial instruments

10. IFRS 10 - Consolidated financial statements

11. IFRS 11 - Joint ventures

12. IFRS 12 - Disclosure of interests in other entities

13. IFRS 13 - Fair value measurement

14. IFRS 14 - Regulatory deferrals deferral accounts

15. IFRS 15 - Revenue from contracts with customers

16. IFRS 16 - Leases

17. IFRS 17 - Insurance contracts

18. IFRS 18 - Presentation of financial statements and disclosures

19. IFRS 19 - Non-publicly accountable subsidiaries - Disclosures

What are the advantages of adopting IFRS?

For a Quebec-based organisation, IFRS brings real benefits that improve the quality of financial information and strengthen credibility with business partners.

Improved financial comparability

IFRS enable financial statements to be comparable from one company to another, regardless of :

• Their size;

• Their industry;

• Or their geographical location.

This comparability facilitates financial analysis, improves the quality of performance indicators and gives managers, analysts and investors a more coherent picture of an organisation's economic situation.

Easier access to investors and international markets

IFRS has become the benchmark financial language for global markets. A company that adopts IFRS :

• Inspires greater confidence in investors;

• Simplifies discussions with financial institutions;

• Facilitates its access to foreign capital;

• And positions itself more easily on international markets.

For growing Quebec businesses, IFRS opens the door to new financing opportunities and strategic partnerships.

Reduced risk of errors and inconsistencies

Thanks to their structured framework, IFRS make it possible to avoid :

• Different accounting treatments;

• Undocumented estimates;

• Equal practices between subsidiaries;

• Or overly broad interpretations of local rules.

IFRS promotes more reliable, rigorous and consistent information, thereby reducing the risk of errors, restatements and major adjustments during internal or external audits.

Better financial image for mergers and acquisitions

In a context of merger, sale or purchase of a company, IFRSs become a major asset. They allow:

• More transparent valuation of assets and liabilities;

• Better visibility of commitments, particularly with IFRS 16;

• More reliable analyses for due diligence;

• And standardised communication with buyers or partners.

A company that presents its financial statements in accordance with IFRS projects an image of solidity, maturity and professionalism, which can have a positive impact on its valuation.

Need IFRS support?

Adopting or understanding IFRS today represents a strategic lever for improving financial transparency, strengthening your organisation's credibility and supporting sustainable growth.

Whether you're planning a transition, accounting harmonisation or consolidation project, our experts can support you every step of the way.

For a diagnostic, gap analysis or full IFRS implementation support, contact the Mallette team today.