IFRS is a set of international accounting standards, which state how particular types of transactions and other events should be reported in financial statements. Some accountants consider methodology to be the primary difference between the two systems; GAAP is rules-based and IFRS is principles-based.

Why are IFRS principle based?

IFRS was established for the purpose of making a single set of global accounting standards, which enables investors easily to compare financial statements of companies located in different countries. … Such descriptions in IFRS are hence called “principles-based” standards.

Are IFRS more principles-based than US GAAP?

GAAP tends to be more rules-based, while IFRS tends to be more principles-based. Under GAAP, companies may have industry-specific rules and guidelines to follow, while IFRS has principles that require judgment and interpretation to determine how they are to be applied in a given situation.