IFRS Foundation

What is IFRS Foundation?

When a client asks "which version of IFRS 15 are we actually on?" the answer traces back to a governance chain most auditors never think about. A Monitoring Board of public authorities (including IOSCO, the Japan FSA, the European Commission, and the US SEC as observer) oversees the Foundation's 22 Trustees. Those Trustees, appointed for renewable three-year terms from geographically balanced backgrounds, set strategy, secure funding, appoint board members, and oversee due process. Beneath the Trustees, the IASB sets IFRS Accounting Standards and the ISSB (established November 2021) sets IFRS Sustainability Disclosure Standards such as IFRS S1 and IFRS S2.

At mid-tier firms, the Foundation matters because it controls the due process pipeline. When the IASB issues a new standard (as with IFRS 18 replacing IAS 1 , effective 2027), the effective date and transition provisions all flow from Foundation-governed procedures. IFRS Foundation Constitution paragraph 2 states that the organisation's principal objectives include developing a single set of high-quality, understandable, and enforceable global standards. Auditors reference IASB-issued standards in their WPs, and the IAS 8 disclosure requirement for pending standards connects the IASB pipeline directly to engagement files. In our experience, teams that just SALY the prior-year framework reference without checking this pipeline end up citing superseded text. Knowing this governance chain matters when a client or regulator questions which version of a standard is authoritative.

Worked example: Henriksen Shipping A/S

Client: Danish maritime logistics company, FY2025, revenue EUR 140M, IFRS reporter. Henriksen prepares consolidated financial statements (FS) under IFRS as adopted by the EU. During the FY2025 audit, the engagement team encounters two issues that trace directly to IFRS Foundation governance.

Step 1 — Confirm applicable framework version

Henriksen reports under "IFRS as adopted by the EU," not "IFRS as issued by the IASB." For each standard applied, the team verifies the EU endorsement status. IFRS 17 (Insurance Contracts) is not relevant to Henriksen, but IFRS 16 and IFRS 15 are confirmed as endorsed and effective.

Documentation note: record the reporting framework as "IFRS as adopted by the EU" in the planning memorandum. List each material standard applied and confirm its EU endorsement status. Note any standards issued by the IASB but not yet endorsed (e.g., IFRS 18 , issued April 2024, EU endorsement pending as of December 2025).

Step 2 — Assess impact of pending IASB standards

IFRS 18 (Presentation and Disclosure in Financial Statements) replaces IAS 1 with a mandatory effective date of 1 January 2027. Henriksen's management has not yet begun its impact assessment. That gap needs documenting. The team evaluates whether IAS 8.30 requires disclosure of the expected impact of IFRS 18 on Henriksen's FS in the FY2025 notes.

Documentation note: record the pending standard, its IASB-issued effective date, the current EU endorsement status, and management's assessment of whether the impact is estimable. If management states the impact cannot yet be determined, document the basis for that conclusion per IAS 8.31 .

Step 3 — Evaluate ISSB disclosure applicability

Henriksen's bank has requested sustainability disclosures aligned with IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information). Denmark has implemented the CSRD, which requires sustainability reporting from FY2025 for large undertakings. The team checks whether Henriksen falls within scope based on employee count (820 employees) and net turnover (EUR 140M), both exceeding the CSRD large-undertaking thresholds.

Documentation note: record the CSRD scoping assessment and the ISSB standards referenced by the bank covenant. Note the distinction between mandatory ESRS reporting (under the CSRD) and voluntary IFRS S1 alignment requested by the lender. IFRS S1 and ESRS share a common conceptual basis but differ in specific datapoints.

These three steps produce a planning file that connects each applied standard to its endorsement status and separates ISSB-issued sustainability standards from CSRD-mandated ESRS requirements. The file also flags IFRS 18 as requiring IAS 8.30 disclosure. The file should tell a story of which standards are in play and which governance body issued them. Without that trail, an inspection reviewer can't verify the team tested the right version of each standard.

Why it matters in practice

• Teams frequently cite "IFRS" in the auditor's report without specifying whether the applicable framework is "IFRS as issued by the IASB" or "IFRS as adopted by [jurisdiction]." This is the finding that generates the most review notes on cross-border engagements. ISA 700.18 requires the auditor's report to identify the applicable financial reporting framework. In the EU, the distinction matters because endorsed IFRS can differ from IASB-issued IFRS when endorsement of a new standard is delayed or when the EU carves out specific provisions (as occurred historically with IAS 39 hedge accounting).
• Engagement teams sometimes treat ISSB standards as automatically applicable alongside IFRS Accounting Standards because both fall under the Foundation. In our experience, teams roll forward the prior year's framework reference without checking whether the endorsement status has changed. The ISSB's IFRS S1 and S2 have separate adoption mechanisms. In the EU, the CSRD and ESRS govern sustainability reporting, not IFRS S1 directly. Conflating the two frameworks in scope documentation creates a regulatory misstatement that inspection teams will question.

IFRS Foundation vs. the IASB

Why does this matter? Because the Foundation can change the constitution, the due process, the board composition, and the funding model without changing a single accounting standard. When the Foundation announced the ISSB in 2021 and later decided to reduce both boards from 14 to 10 members, these were governance decisions with downstream effects on standard-setting capacity and priorities. Most teams treat this as irrelevant background noise until a new standard lands with a short transition window and nobody saw it coming. Auditors who track only IASB exposure drafts miss the governance signals that indicate where standard-setting resources will concentrate next.

Related terms

Related reading

Frequently asked questions