Financial reporting standards are guidelines that dictate how companies should prepare and present their financial statements. These standards ensure consistency, transparency, and comparability in financial reporting, making it easier for investors, regulators, and other stakeholders to understand a company's financial health. The most widely recognized set of standards is the International Financial Reporting Standards (IFRS), which is used by many countries around the world. In the United States, companies typically follow the Generally Accepted Accounting Principles (GAAP). Both sets of standards aim to provide accurate and reliable financial information.