Introduction to International Financial Reporting Standards (IFRS) and convergence with Spanish GAAP

Introduction to IFRS

What are International Financial Reporting Standards?

IFRS are a set of global financial accounting standards that enable companies to present their financial statements in a transparent and comparable manner. Adopted by more than 140 countries, these standards facilitate decision making for investors and stakeholders in an increasingly globalized market. In Spain, although companies follow the General Accounting Plan (PGC), many must adopt IFRS to align with international markets.

Download our full report to gain an in-depth understanding of how IFRS affects accounting and financial statements.

Objective of IFRS and the General Chart of Accounts (PGC)

IFRS seek to establish a common international accounting language, ensuring that companies present their financial statements in a transparent and comparable manner, regardless of the country in which they operate. The General Accounting Plan (PGC), on the other hand, is the accounting standard applied in Spain that regulates the preparation of financial statements according to the requirements of the Spanish framework.

Valuation differences between IFRS and PGC

Although the International Reporting Standards and the PGC pursue similar objectives, there are significant differences in the valuation of certain assets and liabilities. Some of the most relevant differences include:

> Valuation of financial assets: IFRS allow for a more detailed classification, while PGC adopts a single approach.

> Revenue recognition: IFRS are more flexible, allowing revenue to be recognized when control is transferred, which differs from the PGC approach.

> Contingent liabilities: International Reporting Standards address contingent liabilities differently, which may alter the presentation of balance sheets.

Note: Access a comprehensive analysis of the differences between the two regulations in our downloadable report.

Why adopt International Reporting Standards in your company?

IFRS are key for companies to operate internationally, improve transparency and attract investors. Listed companies, or those planning to go public, must comply with these standards to ensure that their financial statements are globally comparable and reliable.