The split is lopsided: the United States is the only major economy that requires US GAAP for its listed companies, while 148 jurisdictions require IFRS for all or most of their publicly accountable entities, and another 12 permit it. That is what countries use GAAP versus IFRS in one sentence. A handful of large economies, notably China, India, and Japan, keep their own national frameworks, though most of those track IFRS closely and are moving toward greater convergence.1IFRS Foundation. Who Uses IFRS Accounting Standards?
One naming point before the map. “GAAP” on its own is ambiguous: most countries have some form of generally accepted accounting principles, and IFRS itself functions as GAAP in the jurisdictions that adopt it. When people ask about GAAP versus IFRS, they almost always mean US GAAP, the framework issued by the Financial Accounting Standards Board (FASB) and organized into the Accounting Standards Codification.2Financial Accounting Standards Board. Standards – Section: Accounting Standards Codification That is how the term is used below.
Countries That Require IFRS
IFRS is issued by the International Accounting Standards Board, which sits under the IFRS Foundation.3IFRS Foundation. International Accounting Standards Board Of the 169 jurisdictions the Foundation has profiled, 161 have made a public commitment to IFRS, and 15 of the G20 economies require it for all or most companies trading on their public capital markets.1IFRS Foundation. Who Uses IFRS Accounting Standards?
The European Union was the tipping point. In 2002, EU Regulation (EC) No 1606/2002 required every company with securities on an EU regulated market to prepare consolidated financial statements under IFRS starting in 2005.4European Commission. Financial Reporting Dozens of countries adopted at once.5IFRS Foundation. IFRS – European Union
Outside Europe, the major economies that require IFRS for listed companies include Canada, Australia, South Korea, South Africa, Brazil, and Russia. Canada allows US GAAP for certain cross-listed issuers but requires IFRS for most publicly accountable entities. The United Kingdom, after leaving the EU, kept IFRS-based standards for listed companies and uses a separate national framework (FRS 102) for private companies.1IFRS Foundation. Who Uses IFRS Accounting Standards?
The IASB also publishes a lighter version called the IFRS for SMEs Accounting Standard, aimed at entities without public accountability. Eighty-seven of the 169 profiled jurisdictions require or permit it.1IFRS Foundation. Who Uses IFRS Accounting Standards?
Where US GAAP Applies
US GAAP is used, as a required framework, in one country. The Securities and Exchange Commission requires every domestic US public company to file its financial statements under GAAP, including on Form 10-K and Form 10-Q. No other country adopts US GAAP as its primary reporting standard, and the United States is the only G20 nation that does not permit its domestic companies to file under IFRS.1IFRS Foundation. Who Uses IFRS Accounting Standards?
The one significant exception runs the other direction. Foreign private issuers that list securities on US exchanges may file with the SEC using IFRS as issued by the IASB, without reconciling to US GAAP. The SEC eliminated the reconciliation requirement for those issuers in November 2007.6U.S. Securities and Exchange Commission. Final Rule: Acceptance From Foreign Private Issuers of Financial Statements Prepared in Accordance With IFRS Foreign issuers reporting under any other framework still owe a full reconciliation to US GAAP in their Form 20-F.7U.S. Securities and Exchange Commission. Form 20-F – Registration Statement and Annual Report for Foreign Private Issuers
Countries With Their Own National Standards
A few large economies keep distinct national frameworks. The IFRS Foundation lists China, India, and Indonesia as G20 members whose national standards are “substantially in line with IFRS” without a timetable for full adoption. Japan permits IFRS voluntarily but does not require it. Outside the G20, Bolivia, Egypt, Honduras, Macao SAR, and Vietnam also maintain their own frameworks.1IFRS Foundation. Who Uses IFRS Accounting Standards?
China
Companies with publicly traded securities in mainland China must use Chinese Accounting Standards for Business Enterprises (ASBEs), issued by the Ministry of Finance in 2006 with substantial convergence toward IFRS. A 2015 joint statement with the IASB reaffirmed the goal of full convergence, without a firm deadline. ASBEs follow IFRS concepts closely but keep modifications tuned to China’s regulatory environment.8IFRS Foundation. Use of IFRS Standards by Jurisdiction: China
India
India uses Indian Accounting Standards (Ind AS), designed as converged with IFRS rather than identical to it. Independent analyses identify 40 or more differences, including carve-outs mandated by Indian regulators. India has committed to the principle of convergence but has not locked in a date for full IFRS adoption.1IFRS Foundation. Who Uses IFRS Accounting Standards?
Japan
Japan is unusual because it lets listed companies choose among four frameworks: Japanese GAAP (JGAAP), IFRS, US GAAP (with regulatory permission), and Japan’s Modified International Standards (JMIS), a hybrid that keeps features of JGAAP such as goodwill amortization.9Accounting Standards Board of Japan. About Japanese GAAP JGAAP remains the most widely used because Japan’s Companies Act sets it as the baseline for statutory reporting.10The Japanese Institute of Certified Public Accountants. Accounting Standards Voluntary IFRS adoption has grown, from 10 companies in 2012 to over 230 by mid-2020, with more than 170 additional companies announcing plans to switch.
Why the Country Split Matters
The two big frameworks produce different numbers for the same underlying business. US GAAP is often described as rules-based, giving detailed guidance for narrow situations. IFRS is described as principles-based, setting broader rules and expecting professional judgment in application. That difference shows up in specific line items.
Inventory is the clearest example. US GAAP allows the Last-In, First-Out (LIFO) method, which many US manufacturers and retailers use to reduce taxable income when prices rise. IFRS bans LIFO. A US company moving to IFRS would need to restate its inventory under another method, potentially triggering a large one-time tax bill.
Goodwill, development costs, and lease classification diverge as well. Under IFRS, goodwill is never amortized and must be tested for impairment annually. US GAAP now permits (but does not require) public companies to amortize goodwill after recent standard changes, and private companies have had that option for years. IFRS requires companies to capitalize development costs once specific criteria are met, while US GAAP generally expenses research and development as incurred, with narrow exceptions for software. These choices move reported earnings, balance sheet values, and the ratios lenders and investors rely on.
Will the US Switch to IFRS?
Probably not soon. The SEC explored requiring or permitting IFRS for US domestic companies through staff reports and comment periods roughly between 2008 and 2012. The process stalled. The SEC’s staff report declined to recommend a clear path, and the Commission has deferred the decision indefinitely.
The barriers are substantial. US tax law, banking regulation, and private contracts are built around GAAP, and a full switch would force every public company to retrain staff, overhaul systems, and restate historical financials. The LIFO issue alone would create a multi-billion-dollar tax event across US industry. The FASB and IASB have instead pursued targeted convergence on individual topics such as revenue recognition and leases, closing some gaps without a wholesale change. That piecemeal approach looks like the road ahead.