Definition

IFRS

IFRS, or International Financial Reporting Standards, is the accounting framework used by companies in more than 140 countries across Europe, Asia, and beyond. The International Accounting Standards Board issues it, and it leans on broad principles rather than the detailed rules that characterize US GAAP, giving preparers more room for judgment. The two frameworks agree on many fundamentals but diverge on points such as inventory costing and how certain assets are revalued. Companies that operate internationally, or that report to a foreign parent, often need to reconcile between IFRS and GAAP. Understanding where the two differ keeps cross-border financial statements consistent and comparable.