International Financial Reporting Standards
IFRS
In one sentenceA set of international accounting standards that determine how transactions are recorded and presented in the financial statements; Saudi Arabia applies them as endorsed by SOCPA.
Simply put
The standards are a “common language” for financial statements, so a bank or investor understands your statements the same way they understand those of any other business.
In Saudi Arabia, the international standards endorsed by the Saudi Organization for Chartered and Professional Accountants (SOCPA) apply. Examples include IFRS 15 for revenue from contracts with customers, IAS 2 for inventories and IFRS 16 for leases.
Example
When preparing a restaurant's statements, IAS 2 determines how inventory materials are measured, and IFRS 15 determines when revenue from prepaid orders is recognized.