What is an Accounting Interpretation?

An accounting interpretation is a document that is intended to clarify the uses to which an accounting standard can be put. As such, it can provide valuable additional information to an accountant regarding how to apply an accounting standard. Interpretations are especially useful when the associated standard applies to a new area of accounting, or significantly alters an existing practice. They are also useful when new accounting situations arise that were not anticipated by the original accounting standard.

An interpretation is intended to be an accompaniment to an accounting standard. In practical usage, an accounting standard lays out the requirements for how to deal with a business transaction, and must be followed by accountants.

Who Issues Accounting Interpretations?

Accounting interpretations have been issued by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB).