IFRS

Published Thursday 23 July 2026

Table of contents

• What is IFRS?
• Who creates and maintains IFRS?
• Is IFRS mandatory in Canada?
• IFRS vs GAAP
• What does IFRS cover?
• Simplify your financial reporting with Xero
• FAQs on IFRS
• Related terms
• Learn more about IFRS

Key takeaways

• IFRS stands for International Financial Reporting Standards, a global set of rules for how financial information is gathered and presented.
• The International Accounting Standards Board (IASB) creates and maintains IFRS, and over 140 countries require it for most publicly accountable companies.
• In Canada, publicly accountable enterprises must use IFRS, while most private companies can choose IFRS or Accounting Standards for Private Enterprises (ASPE).
• IFRS is principles-based, while the United States uses rules-based Generally Accepted Accounting Principles (GAAP).

What is IFRS?

IFRS stands for International Financial Reporting Standards. It's a set of accounting rules for how financial information is gathered and presented in financial reports, so that reporting stays consistent, comparable, and credible worldwide.

When companies in different countries follow the same standards, you can compare their financial statements with confidence. That shared language makes it easier for investors, lenders, and regulators to understand a business, wherever it operates.

Who creates and maintains IFRS?

IFRS is developed and maintained by an independent standard-setter, not by any single government. That independence helps keep the standards consistent across borders.

The standards come from the International Accounting Standards Board (IASB), which sits within the IFRS Foundation, the not-for-profit body responsible for global accounting standards. The IASB reviews and updates the standards over time as reporting needs change.

Is IFRS mandatory in Canada?

Whether IFRS applies to you depends on the type of business you run. For most small businesses, it's optional.

The Canadian Accounting Standards Board (AcSB) requires publicly accountable enterprises to use IFRS for all interim and annual financial statements. Canada adopted IFRS for publicly accountable enterprises in 2011.

Most private companies can choose either IFRS or Accounting Standards for Private Enterprises (ASPE). If you run a private small business, ASPE is often the simpler option, though you can opt for IFRS if it suits your reporting needs.

IFRS vs GAAP

IFRS and GAAP are both frameworks for financial reporting, but they take different approaches. The main difference is how they set the rules.

IFRS is principles-based, which gives you broad guidelines and room for professional judgement. GAAP is rules-based, with detailed, specific requirements to follow. The United States uses GAAP, while over 140 countries require IFRS for most or all publicly accountable companies.

What does IFRS cover?

IFRS sets out how you prepare the core financial statements and how you treat common accounting topics. It governs the main reports that show your financial position and performance.

Here are the key areas IFRS covers:

• Core financial statements: the balance sheet, income statement, cash flow statement, and statement of changes in equity
• Fixed assets: how you record and value property, plant, and equipment
• Revenue recognition: when and how you report income from sales and contracts
• Income taxes: how you account for current and deferred tax
• Record keeping: the disclosures and supporting information behind your reports

Simplify your financial reporting with Xero

Strong financial reporting starts with organized, accurate records. Xero brings your finances together in one place, so your reports stay organized and ready when you need them.

You can track your numbers, run clear reports, and get a real-time view of how your business is doing. See how Xero can support your reporting, and get one month free.

FAQs on IFRS

Here are answers to some frequently asked questions about IFRS for Canadian small business owners.

Who creates IFRS?

IFRS is created by the International Accounting Standards Board (IASB). The IASB operates within the IFRS Foundation, an independent not-for-profit organization.

Do small businesses in Canada need to use IFRS?

Most private small businesses in Canada don't have to use IFRS. They can choose ASPE instead, which is often simpler for smaller operations.

What's the difference between IFRS and ASPE?

IFRS is a global standard required for publicly accountable enterprises in Canada. ASPE is a Canadian standard designed for private enterprises, with lighter reporting requirements.

What's the difference between IFRS and GAAP?

IFRS is principles-based and used in over 140 countries, while GAAP is rules-based and used in the United States. The two frameworks can treat certain transactions differently.

Related terms

• Financial reporting
• Balance sheet
• Income statement
• Cash flow statement

Learn more about IFRS

• Financial statements
• How to read financial statements
• Xero small business guides