What is an Accounting Framework?

An accounting framework is a published set of criteria that is used to measure, recognize, present, and disclose the information appearing in an entity's financial statements. An organization's financial statements must have been constructed using a recognized framework, or else auditors will not issue a clean audit opinion for them.

List of Accounting Frameworks

There are two main accounting frameworks used in the world, with other frameworks applying to niche areas. These frameworks are as follows:

Generally Accepted Accounting Principles (GAAP). GAAP is used by entities in the United States. It is a rules-based framework with detailed guidelines for various industries and transactions.
International Financial Reporting Standards (IFRS). IFRS is used in more than 140 countries, including the European Union, Australia, Canada, and parts of Asia and Africa. It is a principles-based framework that focuses on global comparability and transparency.

These two frameworks are designed to be broad-based and therefore applicable to most types of businesses. Here are several additional accounting frameworks:

Governmental Accounting Standards. This framework applies to U.S. state and local governments. It is similar in structure to GAAP, but is tailored for public sector needs.
Sustainability reporting standards. These frameworks are designed to guide organizations in disclosing their environmental, social, and governance (ESG) performance and impacts. These standards aim to enhance transparency, comparability, and accountability in sustainability practices. These frameworks include the following:
- Global Reporting Initiative
- Sustainability Accounting Standard Board
- Task Force on Climate-Related Financial Disclosures
- International Sustainability Standards Board
- Carbon Disclosure Project
- European Sustainability Reporting Standards

There are other accounting frameworks that are designed for special situations, and which are known as other comprehensive bases of accounting (OCBOA).