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IFRS (International Financial Reporting Standards), IAS (International Accounting Standards) and generally accepted accounting principles (GAAP)

Both the International Accounting Standards (IAS) and the International Financial Reporting Standard (IFRS) are issued by International Accounting Standard Board (IASB), in London. They are developed to provide a consistent and transparent framework for financial reporting.

IAS include the standards that the accountants should apply while they are recording transactions in their companies’ books. Whilst IFRS explains how to report the results of those transactions to the public. IAS and IFRS are applied in Europe and most countries of Asia & Africa. IFRS is presented in a standard format, with each standard containing a set of requirements, explanatory notes, and examples.

IAS, on the other hand, was not presented in a consistent format, and some standards lacked guidance on implementation. While IFRS is the current set of standards, IAS refers to the previous versions of the standards.

Generally accepted accounting principles (GAAP) is the accounting standard set by the Financial Accounting Standards Board (FASB) for the Securities and Exchange Commission (SEC) in the United States. It’s a rule-based system that all domestic and Canadian publicly traded companies must follow when filing financial statements. The purpose of GAAP is to help investors analyze financial data and compare different companies to make informed financial decisions.

GAAP almost contain the same standards as IAS/IFRS except for some minor differences in some topics (for example, Treatment of research and development cost, non-monetary exchange, foreign currency transaction, marketable securities classification and impairment, fixed assets valuation and impairment, Pension plan, lease, bond, cash flow classification, and change in equity statement).


Overall, IFRS is a more comprehensive and principles-based set of accounting standards compared to IAS, and it provides a more consistent and transparent framework for financial reporting. GAAP on the other hand is rule-based and applied in the USA and Canada.

Within the last decade, the IASB and FASB have held many meetings and conferences to try to eliminate their differences and create same Accounting Standards accepted worldwide, but they have not reached an agreement till date.

Gervase Mwango – BA Ed, CA – ACCA