What is IFRS?
IFRS, or International Financial Reporting Standards, are a set of accounting rules for how information should be gathered and presented in financial reports.
The standards ensure that information is consistent, comparable and credible worldwide, using a common accounting language.
These standards were created and are maintained by the International Accounting Standards Board (IASB). The IFRS cover a wide range of topics including fixed assets, income taxes, record keeping, revenue recognition, and other aspects of financial reporting.
IFRS standards are required in over 140 countries for most or all companies. However companies in the US currently use a different system, the Generally Accepted Accounting Principles (GAAP).
The main difference between GAAP and IFRS is that IFRS is principle-based and allows more flexibility, while GAAP is rule-based, more rigid and allows less room for interpretation.
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This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.