What is IFRS?
Learn what IFRS is, who sets it, who must use it in Ireland and how it differs from GAAP.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- IFRS is a global set of accounting standards, written by the IASB, for presenting financial statements. The IFRS Foundation says more than 140 jurisdictions require them.
- EU-listed groups, including Irish ones, prepare consolidated accounts under IFRS. Most Irish small companies use FRS 102 or FRS 105 instead.
- IFRS is principles-based, while US GAAP is rules-based. US domestic companies must use US GAAP.
- IFRS 18 replaces IAS 1 for periods beginning on or after 1 January 2027. The EU endorsed it in February 2026.
What is IFRS?
International Financial Reporting Standards (IFRS) are a global set of accounting standards for presenting financial statements. They give investors and lenders a common accounting language, so reports from different countries are consistent and comparable.
The standards cover how to recognise, measure, present and disclose items such as property, plant and equipment, income taxes, revenue and leases. The IFRS Foundation reports that IFRS Accounting Standards are required for use in more than 140 jurisdictions.
IFRS governs how finished accounts look, while how you record transactions day to day in Ireland comes from the Companies Act 2014 and Revenue.
Why IFRS matters
IFRS matters because it lets investors compare companies across borders on the same basis. The IFRS Foundation believes better company information leads to better investment decisions.
Picture an investor in Cork weighing up a listed Irish food company and a French rival. If both report under IFRS, revenue, debt and profit are measured the same way, so the investor can compare like with like.
For a small business, the benefit is indirect: if you supply a listed company or seek investment, the basics help you read the other side’s numbers.
Who sets IFRS: the IASB and IFRS Foundation
The International Accounting Standards Board (IASB) writes IFRS Accounting Standards, and the IFRS Foundation oversees it. The Foundation is an independent, not-for-profit organisation created in 2001, when the IASB took over from the earlier International Accounting Standards Committee.
This explains the two names you’ll see. Standards issued before 2001 are International Accounting Standards (IAS), such as IAS 16, and newer ones are IFRS. Many IAS remain in force, and “IFRS” now covers both.
The Foundation also runs the International Sustainability Standards Board (ISSB). The ISSB issued IFRS S1 and IFRS S2, its first sustainability disclosure standards, on 26 June 2023.
Who uses IFRS
Listed companies and large groups are the main users of IFRS, especially in the EU.
The EU IAS Regulation (EC) 1606/2002 requires companies with securities on an EU regulated market to prepare consolidated accounts under EU-adopted IFRS. This has applied to financial years starting on or after 1 January 2005. For individual company accounts and unlisted companies, each member state decides, which is why Ireland gives companies a choice.
In the US, the Securities and Exchange Commission (SEC) requires domestic companies to use US Generally Accepted Accounting Principles (GAAP). The IFRS Foundation’s US profile confirms that the SEC lets foreign private issuers file IFRS financial statements without reconciling them to US GAAP.
Does your Irish business need to use IFRS?
Probably not, unless your company is part of a listed group. Most Irish small companies use a Financial Reporting Standard (FRS) from the UK’s Financial Reporting Council (FRC), usually FRS 102, or FRS 105 for micro companies.
Under section 290 of the Companies Act 2014, directors elect to prepare either Companies Act entity financial statements or IFRS entity financial statements. If you choose IFRS, section 292 requires you to comply with all IFRS, which counts as giving a true and fair view.
FRS 102 has recently changed too. The FRC’s Periodic Review 2024, summarised by KPMG, brings in an IFRS 15-style revenue model. It also puts most leases on the lessee’s balance sheet, in line with IFRS 16.
Most changes apply to periods beginning on or after 1 January 2026, and FRS 102 remains a separate UK and Irish standard.
The International Federation of Accountants (IFAC) notes that Ireland hasn’t adopted IFRS for SMEs, the IASB’s standard for small and medium-sized entities. The Irish Auditing and Accounting Supervisory Authority (IAASA) oversees the accountancy profession and monitors financial reporting by certain listed companies.
Your accountant can confirm the right framework, and tidy small business accounting records make either one quicker to report under.
Key principles and elements of IFRS
IFRS rests on the IASB’s Conceptual Framework for Financial Reporting. It defines what makes financial information useful and names the building blocks of every statement.
Qualitative characteristics of useful information
The Framework says useful information must be relevant and faithfully represent what it describes. Four further qualities make it more useful:
- comparability, so readers can compare periods or companies
- verifiability, so independent reviewers could reach similar conclusions
- timeliness, so information arrives in time to shape decisions
- understandability, so information is classified and presented clearly
The 5 elements of financial statements
Every figure in IFRS financial statements belongs to one of five elements: assets, liabilities, equity, income and expenses. Each entry you post through double-entry bookkeeping touches at least two of them; for example, a cash sale increases both an asset and income.
IFRS statements use the accrual basis, so income counts when you earn it and expenses count when you incur them. If cash vs accrual accounting is new to you, start with that timing difference.
Financial statements required under IFRS
Under IAS 1, today’s presentation standard, a complete set of IFRS financial statements has five parts. Deloitte’s IAS 1 summary lists them as:
- a statement of financial position, often called a balance sheet
- a statement of profit or loss and other comprehensive income
- a statement of changes in equity
- a statement of cash flows
- notes that explain the figures
Your accountant usually builds these from a year-end trial balance, mapping each account to a statement.
IFRS 18 Presentation and Disclosure in Financial Statements was issued in April 2024. It replaces IAS 1 for annual periods beginning on or after 1 January 2027.
The European Financial Reporting Advisory Group (EFRAG) confirms the EU endorsed IFRS 18 in February 2026. Irish companies reporting under IFRS will apply it from 1 January 2027.
IFRS vs GAAP
The main difference is approach: IFRS is principles-based and US GAAP is rules-based.
Picture IFRS as a sign saying “drive at a safe speed” and US GAAP as one showing an exact limit. The first relies more on the driver’s judgement.
Four distinctions follow from that approach.
- IFRS sets broad principles that preparers apply with professional judgement
- US GAAP sets more detailed rules for specific situations
- IFRS allows more flexibility and room for interpretation
- US GAAP is more rigid, leaving less room for interpretation
Keep your records ready for IFRS or FRS 102 reporting with Xero
Whichever framework your accountant uses, accurate year-round records make year-end reporting quicker. Xero brings in your bank transactions through automated bank feeds and turns your data into easy-to-read reports.
You can also work with your accountant in real time. Try Xero today and get one month free.
FAQs on IFRS
Here are quick answers to common questions about IFRS, including how it applies in Ireland.
What are the 4 principles of IFRS?
The closest match in the Conceptual Framework is its four enhancing qualitative characteristics: comparability, verifiability, timeliness and understandability. They make information more useful once it’s already relevant and faithfully represented.
What are the 5 elements of IFRS?
The five elements are assets, liabilities, equity, income and expenses. Assets, liabilities and equity show your position on a given date, while income and expenses show your performance over a period.
What’s the fundamental difference between IFRS and US GAAP?
IFRS is principles-based and US GAAP is rules-based. Until a 2007 SEC rule, foreign private issuers filing IFRS accounts in the US also had to reconcile them to US GAAP.
Why hasn’t the US adopted IFRS?
The SEC still requires US GAAP from US domestic companies, so there’s no mandate to change. It accepts IFRS as issued by the IASB from foreign private issuers, so US markets already use both frameworks.
Do Irish small businesses have to use IFRS?
IFRS is optional for most Irish small businesses, which usually use FRS 102 or FRS 105. Once a company elects IFRS entity financial statements, it generally stays on IFRS under the Companies Act 2014. Moving back generally needs a relevant change of circumstances, so talk to your accountant first.
What is IFRS for SMEs and does Ireland use it?
IFRS for SMEs is a simplified IASB standard for smaller companies. Its third edition, issued in February 2025, takes effect from 1 January 2027. Ireland uses FRS 102 and FRS 105 in its place.
Related terms
Learn more about IFRS
Handy resources
Advisor directory
You can search for experts in our advisor directory
Xero Small Business Guides
Discover resources to help you do better business
Try Xero for free
Try Xero’s fast, simple, powerful online accounting software for your small business
Disclaimer
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.