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What is IFRS? International Financial Reporting Standards explained

Learn what IFRS means, how it applies to Singapore companies and what changes from 2027.

Published Wednesday 30 September 2026

Table of contents

Key takeaways

  • International Financial Reporting Standards (IFRS) are global accounting rules. They give financial reports a common language, so investors can compare companies across borders.
  • In Singapore, companies listed on the Singapore Exchange use a framework identical to IFRS. Most private companies follow local Singapore standards instead.
  • IFRS is principles-based, while US Generally Accepted Accounting Principles (GAAP) are more rules-based. They differ on inventory, revaluation, impairment and development costs.
  • Major changes apply to periods starting on or after 1 January 2027, including IFRS 18. Preparing early keeps your year-end reporting on schedule.

What is IFRS?

IFRS are a set of accounting rules for how businesses gather and present information in financial reports. The International Accounting Standards Board (IASB) creates and maintains them, so reports stay consistent and comparable worldwide.

Think of IFRS as a shared accounting language. An investor in Singapore can read the consolidated accounts of a listed French company with ease. Both markets use the same rules.

The standards cover areas such as fixed assets, income taxes, record keeping and revenue recognition. The IFRS Foundation has completed profiles for 170 jurisdictions, covering places that require the standards as well as places that only permit them.

History of IFRS and the IASB

IFRS grew out of International Accounting Standards (IAS) issued by an earlier body. Today’s standard setter, the IASB, took over from that committee in 2001.

The International Accounting Standards Committee (IASC) issued the original IAS standards. In April 2001, the IASB adopted IAS standards originally issued by the IASC, and it now sets standards under the IFRS Foundation, created in 2001.

Adoption gathered pace when the European Union (EU) made the standards compulsory. According to the IFRS Foundation’s EU profile, EU companies whose securities trade on a regulated market have used IFRS for their consolidated financial statements since 2005.

Use kept spreading after that. By January 2018, 144 of the 166 jurisdictions profiled by the IFRS Foundation required IFRS, according to Deloitte. Singapore moved its listed companies onto an IFRS-identical framework that same year.

How IFRS applies in Singapore

In Singapore, you apply IFRS through local standards issued by the Accounting Standards Committee (ASC). The set you use depends on whether your company is listed and how big it is.

Since 1 April 2023, the ASC has sat within the Accounting and Corporate Regulatory Authority (ACRA), following a merger into ACRA. The IFRS Foundation’s Singapore profile notes that the Companies Act requires every Singapore-incorporated company, listed or not, to follow ASC-prescribed standards.

Four frameworks cover most Singapore-incorporated companies.

  • Companies listed on the Singapore Exchange (SGX) use Singapore Financial Reporting Standards (International), or SFRS(I), for periods beginning on or after 1 January 2018
  • Non-listed companies generally use Singapore Financial Reporting Standards (SFRS)
  • Non-listed companies can also choose to apply SFRS(I) voluntarily
  • Qualifying small companies can use SFRS for Small Entities, a simpler framework

SFRS for Small Entities is for companies without public accountability, and it has three size tests. You qualify by meeting at least two over the previous two financial years: up to S$10 million in revenue, up to S$10 million in gross assets and up to 50 employees.

Say you run a design studio with S$3 million in revenue, S$1 million in assets and 12 staff. You’d pass all the tests, so you could report under SFRS for Small Entities with your accountant’s guidance.

Core principles of IFRS

IFRS is principles-based, so it sets out the goals of good reporting and expects you to use judgement to meet them. Those goals come from the Conceptual Framework for Financial Reporting, which describes what makes financial information useful.

The framework names two fundamental qualities: information must be relevant, and it must faithfully represent what it describes. Four enhancing qualities then make relevant, faithful information easier to use.

  • Comparability, so readers can compare results across periods and with other businesses
  • Verifiability, so independent people could reach similar conclusions about the figures
  • Timeliness, so information reaches decision-makers while it can still guide them
  • Understandability, so information is clear and concise for its readers

For example, if you value stock the same way every year, your bank can compare this year’s margins with last year’s. That consistency is comparability at work.

Financial statements required under IFRS

A complete set of IFRS statements has five parts, as set out in International Accounting Standard (IAS) 1. Each part of your financial statements answers a different question about the business.

  • A statement of financial position at the end of the period, often called the balance sheet
  • A statement of profit or loss and other comprehensive income for the period
  • A statement of changes in equity for the period
  • A statement of cash flows for the period
  • Notes, including a summary of significant accounting policies

IAS 1 is due to be replaced by IFRS 18 from 2027, so the rules behind these statements are changing.

IFRS vs GAAP: key differences

The main difference is approach: IFRS is principles-based and allows more judgement, while US GAAP is rules-based and more detailed. The gap matters most if you report to a US parent company or investor.

Four practical differences show how this plays out.

Picture a Singapore subsidiary whose factory recovers in value after a downturn. Under IFRS, it could reverse an earlier impairment, while its US parent would keep the lower value under US GAAP.

Upcoming IFRS changes for 2027

Several new standards apply to annual periods beginning on or after 1 January 2027. Some are compulsory and some are optional, so check which ones apply to your company.

  • IFRS 18 Presentation and Disclosure in Financial Statements replaces IAS 1, with earlier application permitted
  • SFRS(I) 18 is Singapore’s matching standard, issued by the ASC alongside FRS 118 for companies using SFRS
  • The IFRS for SMEs Accounting Standard third edition, issued in February 2025, takes effect, with early adoption allowed
  • IFRS 19 offers reduced disclosures to eligible subsidiaries without public accountability, on a voluntary basis

Climate reporting is growing alongside these changes. According to ACRA, all SGX-listed companies report Scope 1 and 2 greenhouse gas emissions from financial year (FY) 2025.

In FY2025, Straits Times Index (STI) constituents also began other climate disclosures based on IFRS S1 and IFRS S2. Other listed companies phase in fuller disclosures later, and large non-listed companies join from FY2030.

How to prepare for IFRS reporting in 4 steps

Getting ready for IFRS-based reporting starts with the basics in your books. These four steps help you and your accountant prepare for year end and the 2027 changes.

1. Confirm which framework applies to you

Check whether your company is listed, then test it against the SFRS for Small Entities size criteria. Your accountant can confirm the right framework and any approvals you’d need.

2. Record every transaction consistently

Accurate statements depend on complete records, so record transactions as they happen and code them the same way each time. Using double-entry bookkeeping means every entry balances, which makes errors easier to spot.

3. Keep your books on an accrual basis

Recording income when you earn it and expenses when you incur them gives a truer picture of each period. Keeping your books on an accrual basis also makes formal year-end statements simpler to prepare.

4. Review your numbers before year end

A regular internal audit helps you catch gaps in records and controls before your accountant prepares the statements. Use the review to flag anything the 2027 changes may affect, such as how you present profit or loss.

Keep your IFRS reporting on track with Xero

Clear, consistent records make any reporting framework easier to meet, and early preparation leads to a smoother year end. Xero brings your accounting data into easy-to-read reports, and you can work with your accountant in real time. Try Xero today and get one month free.

FAQs on IFRS

Here are quick answers to common questions about IFRS in Singapore.

What does IFRS stand for?

IFRS stands for International Financial Reporting Standards, now formally called IFRS Accounting Standards. The term also covers older IAS standards still in force, such as IAS 2 on inventory and IAS 36 on impairment.

Is IFRS mandatory in Singapore?

Singapore law requires ASC-prescribed standards, so listed companies report under IFRS through SFRS(I). Non-listed companies can also apply full IFRS if ACRA approves it.

What is the difference between IFRS and SFRS(I)?

SFRS(I) is issued by the ASC as Singapore’s version of IFRS, and its content is identical to IFRS Accounting Standards. Companies that comply with SFRS(I) can also state that they comply with IFRS.

What are the five elements of financial statements under IFRS?

The Conceptual Framework defines five elements: assets, liabilities, equity, income and expenses. Assets, liabilities and equity appear in the statement of financial position, while income and expenses flow through profit or loss.

Why hasn’t the US adopted IFRS?

The US Securities and Exchange Commission (SEC) requires domestic issuers to use US GAAP. Since 2007, it has let foreign private issuers file IFRS statements without reconciling them to US GAAP, as an option.

Do small businesses need to follow IFRS?

Most Singapore small businesses use SFRS or, if eligible, SFRS for Small Entities in place of full IFRS. If your Singapore-incorporated company later lists on SGX, you’d move to SFRS(I).

Related terms

Learn more about IFRS

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Disclaimer

This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.