How Has IFRS Evolved?

Abstract

This paper presents a comprehensive set of evidence on the evolution of International Financial Reporting Standards (IFRS). It reports that IFRS grew in guidance, exceptions, and length over the years through the issuance of new IFRSs to replace International Accounting Standards and Interpretations, and through IFRS amendments. Yet, the International Accounting Standards Board (IASB) and the Interpretations Committee (Committee) maintained a principles-based approach to standard-setting. Consistent with this, the IASB specified the underlying principles and provided guidance in successive IFRSs to help preparers apply them. Further, the Committee and the IASB declined to develop Interpretations and amend IFRS, respectively, in response to constituent requests when they believed IFRS already provided sufficient guidance. Finally, the growth in IFRS guidance, exceptions, and length was due to constituent demands during the due process, convergence projects, the Global Financial Crisis, interest rate benchmark reforms, COVID-19, unclear and inconsistent IFRS requirements, and insufficient guidance.