What is IFRS Standards?
International Financial Reporting Standards (IFRS) are a globally recognized set of accounting standards issued by the International Accounting Standards Board (IASB) that prescribe how transactions should be recognized, measured, presented, and disclosed in financial statements.
How It Works
- Issued by the IASB, with each standard covering a specific accounting topic.
- Includes IFRS 1-18 plus IAS 1-41 (legacy standards still in force).
- Interpreted by IFRIC and SIC committees.
- Adopted in over 140 jurisdictions worldwide.
Saudi Context
The Saudi Organization for Chartered and Professional Accountants (SOCPA) endorsed IFRS in 2017 for all listed Saudi companies. Non-listed Saudi entities have applied IFRS for SMEs (a simplified version) since 2018. ZATCA accepts IFRS-prepared financial statements for both corporate income tax and zakat assessments.
Example
A Saudi joint-stock company applies IFRS 15 to recognize revenue from a 3-year service contract worth SAR 6,000,000, allocating SAR 2,000,000 per year over the performance period rather than the full amount on signature.