Question

International Financial Reporting Standards (IFRS) are:

1) Prohibited by the SEC for companies that list their shares in the U.S.
2) Standards that address how auditors conduct their audits of financial statements of non-U.S. companies.
3) Used by companies in 130 countries in the recording and reporting of accounting information.
4) All of the choices are correct regarding IFRS

Answer 1

IFRS is a set of accounting standards used globally by companies for financial reporting but does not dictate how audits should be conducted. The correct answer regarding IFRS is that they are used by companies in 130 countries.

Step-by-step explanation:

International Financial Reporting Standards (IFRS) are not prohibited by the SEC for companies that list their shares in the U.S. Rather, they are a set of accounting standards that are used by companies in 130 countries for the recording and reporting of their accounting information.

IFRS are designed to create a common accounting language, so that financial statements can be consistent, transparent, and comparable around the world. However, these standards do not address how auditors conduct their audits. That is the role of the International Standards on Auditing (ISA). Therefore, option 2 in the question is incorrect. The correct answer to the student's question about IFRS is that they are used by companies in 130 countries in the recording and reporting of accounting information, which corresponds to option 3 from the given choices.