IFRS (International Financial Reporting Standards)
An international framework for financial reporting that makes accounts comparable and transparent across national borders.
IFRS stands for International Financial Reporting Standards, and is an international framework for the preparation of accounts. The framework aims to standardise accounting practice across national borders, so that financial reports become consistent, comparable and transparent. It helps to reduce the confusion that can arise from differing national accounting rules.
Who has to follow IFRS?
It is first and foremost large entities that have to follow IFRS, in particular:
- Listed companies must prepare consolidated accounts under IFRS.
- Companies with listed debt instruments must also follow IFRS.
A relatively small proportion of Norwegian businesses have to follow IFRS. Smaller entities generally only need to follow the Norwegian accounting rules, that is, the Accounting Act (regnskapsloven) and god regnskapsskikk (Norwegian good accounting practice).
Why does IFRS matter?
IFRS helps to ensure that the accounts are intelligible and comparable across national borders. It gives greater transparency for stakeholders, makes international co-operation easier and strengthens credibility with global partners.
Differences between IFRS and the Norwegian Accounting Act
An important difference lies in the approach: IFRS is balance sheet-oriented and focuses on recognising assets and liabilities in the balance sheet. The Norwegian Accounting Act is more profit and loss-oriented, and emphasises how income and costs affect the result for the year. Where the two conflict, IFRS generally applies in consolidated accounts.
More terms in accounting and bookkeeping
See all →Double-entry bookkeeping
A method in which every transaction is recorded in two places, as a debit and a credit, so that the accounts always balance.
Supporting documents (bilag)
Documentation of a financial transaction, such as receipts and invoices, which serves as evidence for the entries in the accounts.
Reconciliation
A method of comparing the accounts against external sources, such as bank statements, to make sure the figures agree.
Notes to the accounts
Supplementary disclosures to the annual accounts that explain figures, values and methods, and make the accounts intelligible to outsiders.
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