IFRS Standards

Key IFRS standards compared to US GAAP and other accounting standards

Written by CFI Team

Read Time 2 minutes

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What are IFRS Standards?

IFRS standards are International Financial Reporting Standards (IFRS) that consist of a set of accounting rules that determine how transactions and other accounting events are required to be reported in financial statements. They are designed to maintain credibility and transparency in the financial world, which enables investors and business operators to make informed financial decisions.

IFRS standards are issued and maintained by the International Accounting Standards Board and were created to establish a common language so that financial statements can easily be interpreted from company to company and country to country.

IFRS Standards

IFRS are the standard in over 100 countries, including the EU and many parts of Asia and South America. The United States, however, has not yet adopted them and the SEC is still deciding whether or not they should move toward them as the official standard of accounting.

List of IFRS Standards

Below is a list of IFRS standards from http://www.ifrs.org/issued-standards/list-of-standards/

IFRS #	IFRS Standard
1	First-time Adoption of International Financial Reporting Standards
2	Share-based Payment
3	Business Combinations
4	Insurance Contracts
5	Non-current Assets Held for Sale and Discontinued Operations
6	Exploration for and Evaluation of Mineral Resources
7	Financial Instruments: Disclosures
8	Operating Segments
9	Financial Instruments
10	Consolidated Financial Statements
11	Joint Arrangements
12	Disclosure of Interests in Other Entities
13	Fair Value Measurement
14	Regulatory Deferral Accounts
15	Revenue from Contracts with Customers
16	Leases
17	Insurance Contracts

IFRS vs. US GAAP

The largest difference between the US GAAP (Generally Accepted Accounting Principles) and IFRS is that IFRS is principle-based while GAAP is rule-based. Rule-based frameworks are more rigid and allow less room for interpretation, while a principle-based framework allows for more flexibility.

There are pros and cons to both approaches, depending on how they are used. For example, using a standard that fits within a “rule” but that clearly does not represent the principle behind the standard can be a downside of the GAAP. While conversely, taking an overly liberal interpretation of standards is a potential drawback to the IFRS.

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