IFRS 18 vs US GAAP: how do they compare?
| Area | IFRS 18 | US GAAP |
|---|---|---|
| Structure of the income statement | Operating, investing, financing, income taxes and discontinued operations categories | No required categories; SEC rules require certain line items for public companies |
| Operating profit | Required subtotal with a set meaning | Not defined; companies present their own if they choose |
| Profit before financing and income taxes | Required for most companies | No equivalent |
| Expense disaggregation | Expenses by nature or function; if by function, five specified expenses by nature in the notes | ASU 2024-03: public companies disaggregate relevant expense captions into purchases of inventory, employee compensation, depreciation, intangible amortisation and depletion |
| Adjusted performance measures | Management-defined performance measures disclosed and reconciled in an audited note | Non-GAAP measures governed by SEC Regulation G and Item 10(e), outside the financial statements |
| Interest paid in the cash flow statement | Financing for most companies | Operating |
What does ASU 2024-03 require?
Public business entities must disclose, in a tabular note, how each relevant expense caption on the face of the income statement, such as cost of sales or selling, general and administrative expenses, is made up of purchases of inventory, employee compensation, depreciation, intangible asset amortisation and depletion, with the remainder described qualitatively. They must also disclose total selling expenses and how they define them. It applies to annual periods beginning after 15 December 2026 and interim periods a year later.
What will an analyst see?
Take two telecom operators with identical results: one reporting under IFRS 18, one under US GAAP.
- The IFRS operator shows operating profit, a defined subtotal that excludes interest income on cash and the share of associates' profit, then profit before financing and income taxes. Its adjusted EBITDA, if it publishes one, appears in an audited note reconciled to operating profit.
- The US operator may show operating income, but defined its own way, and its adjusted EBITDA appears in its earnings release and SEC filings outside the financial statements. Its notes break cost of revenue and SG&A into employee costs, depreciation and other natures under ASU 2024-03.
The figures can be reconciled, but not compared line by line without adjustment. See the IFRS 18 telecom worked example.
Are management-defined performance measures the same as non-GAAP measures?
They overlap. IFRS 18 captures subtotals of income and expenses used in public communications, such as adjusted operating profit, and brings them into the audited notes with a reconciliation and the tax and non-controlling interest effect of each adjustment. SEC rules on non-GAAP measures are broader, covering cash flow measures too, but apply to filings and releases rather than the financial statements. See management-defined performance measures.
Where to go next
See IFRS 18 explained and IAS 7 vs ASC 230 for the cash flow differences.
Need help applying the standards?
Our Chartered Accountants help finance teams and students apply IFRS and US GAAP to real transactions.
Questions people ask
What is the difference between IFRS 18 and US GAAP income statements?
IFRS 18 requires defined categories and subtotals, including operating profit; US GAAP requires no operating profit subtotal but, under ASU 2024-03, more expense detail in the notes.
What is ASU 2024-03?
A FASB update requiring public business entities to disaggregate certain income statement expense captions into specified natural expenses in the notes.
Does US GAAP define operating profit?
No. Companies may present an operating income subtotal, but US GAAP does not define what it includes.
Are IFRS 18 management-defined performance measures audited?
Yes, they are disclosed in a note to the financial statements. US non-GAAP measures are presented outside the financial statements under SEC rules.
Sources
Every fee, date and rule on this page was taken from these official and primary sources.
- IFRS Foundation: IFRS 18 Presentation and Disclosure in Financial Statements
- FASB Accounting Standards Codification: Topic 220, Income Statement
Rules and fees change. If you are reading this long after October 4, 2026, confirm the figures with the source before you rely on them.
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This guide is general information. It is not tax or legal advice for your situation.