IFRS

DEFINITION

International Financial Reporting Standards are the accounting framework used by public companies in over 140 countries, set by the International Accounting Standards Board (IASB). The SEC permits foreign private issuers to file 20-F using IFRS without reconciling back to US GAAP. The two systems differ in specific areas: inventory methods (IFRS bans LIFO), R&D capitalization (IFRS allows in some cases), and revaluation of long-lived assets.

WHY IT MATTERS FOR RETAIL INVESTORS

When comparing a US company against a foreign peer, you are often comparing GAAP against IFRS — and the differences can materially affect headline earnings. Watch for: capitalized vs. expensed R&D (favors IFRS), inventory accounting (LIFO/FIFO differences), goodwill impairment timing, and lease accounting. The closer you are to a precise relative-value call, the more these differences matter.

RELATED TERMS

• GAAP
• 20-F