Public companies in many countries prepare financial statements from one shared set of accounting rules. A reader can then compare one company’s results with another’s without first reconciling two national rulebooks.
The International Accounting Standards Board issues the standards. The board sits with the IFRS Foundation. Together they maintain the single set, so the same topics are measured in the same way from one reporting period to the next.
Who Issues the Standards
The standards are not a private company’s house manual, and they are not a statute written for one country. Two related bodies keep the set current.
- The board: The International Accounting Standards Board writes and updates the standards that public companies apply.
- The foundation: The IFRS Foundation is the organization the board sits with. It does not replace the board’s role in issuing the standards.
- The purpose: One set of rules exists so statements can be compared across companies and across countries.
Topics the Standards Cover
The standards run topic by topic. Each topic tells a company what to measure and when to report it. Three of those topics, in plain words, are revenue, leases, and inventory measurement.
| Topic | What the Rules Require |
| Revenue | Recognize income when the company has delivered what the customer contracted for, not only when cash is received. |
| Leases | Report the right to use an asset for a period, and the payments still owed, rather than describing the whole arrangement as rent alone. |
| Inventory measurement | Measure goods held for sale so the reported value is not overstated. If the goods are worth less than they cost, the statements use the lower amount. |
How U.S. Companies Still File
U.S. public companies still file under generally accepted accounting principles in most cases. Those domestic principles are a separate set, written for the U.S. market. A reader comparing a U.S. filing with a filing prepared under these international standards should not assume every line was measured the same way.
