What is IFRS?
Published
IFRS (International Financial Reporting Standards) are the international financial reporting standards issued by the IASB and adopted by most of the world to prepare financial statements in a common language comparable across borders.
The Saudi context
The Kingdom applies IFRS as endorsed by SOCPA - meaning SOCPA adopts the IASB's standards with any local modifications it deems necessary, and the official endorsement is the reference. The result is that your Saudi statements read in a language a bank or investor in London or Singapore understands - a real market opening for a business that grows.
Who applies which?
| Entity | Applied standard |
|---|---|
| Listed and public-interest entities | Full IFRS (the endorsed original) |
| Small and medium enterprises | IFRS for SMEs - a simplified version (its page) |
| Micro entities | Usually apply IFRS for SMEs too, with practical accommodations |
The difference isn't merely technical - full IFRS imposes complex disclosures and measurements (financial instruments, detailed deferred tax, segment disclosures) that burden a small business with no practical benefit.
What IFRS means in daily statements
Most pages of this glossary operate under IFRS logic without naming it: revenue recognition on performance, the accrual basis, asset and liability measurement at cost or fair value, disclosure of accounting policies. The framework runs in the background even when unnamed.
Frequently asked questions
Should I know IFRS as a business owner?
As a framework, roughly yes - your decisions (accounting policies, valuation methods, revenue recognition) flow from it. The technical detail is the accountant's craft.
I adopted IFRS for SMEs and grew - when do I switch to full IFRS?
On crossing classification thresholds or changing legal form (listing, seeking financing that demands full IFRS). The transition isn't automatic - it's a documented decision with its disclosures.