International Financial Reporting Standards, or IFRS, are guidelines released by the International Accounting Standards Board and the IFRS Foundation.
In order to make corporate accounts accessible and comparable across international borders, the International Accounting Standards Board (IASB) established an uniform worldwide language for commercial affairs.
The adoption of IFRS has been prioritized by Saudi Arabia since it joined the Group of Twenty Finance Ministers and Central Bank Governors (G20) in 2009 because it is seen as a critical step in the nation’s future economic growth. In order to help investors make “best investment decisions,” the convergence of national GAAP and IFRS provides “transparent, comparable, and consistent financial information.”
Some of the main advantages that the nation will see from the implementation of IFRS are more foreign direct investment and improved quality reporting, transparency, and comparability. Quality, clear information that is similar to other IFRS reporting preparers will help KSA draw in direct foreign investment as it works to lessen its reliance on oil.
Adoption of IFRS depends on the belief that doing so enhances the quality of financial information. Companies would certainly experience more difficulties complying if they do not see the implementation of IFRS as helpful to their operations. Small firms took longer to comply with the transition to IFRS than larger companies because they were unable to recognize the benefits of the change right away.
Reporting under IFRS is substantially more difficult than under Saudi GAAP since it requires greater disclosures, which will help users, particularly investors, to be better informed.