Essay on Gaap vs Ifrs

As stated earlier, the IASB arose from specific needs of the accounting industry and the public. As international trade has increased, the need for transnational accounting information has increased as well. This sparked the demand for development of international accounting standards to make financial data between countries more comparable. In 1973, the International Accounting Standards Committee (IASC) was formed to develop these international standards. The standards issued by the IASC, prior to 2001, were called International Accounting Standards (IASs). In 2001, the IASC made the International Accounting Standards Board (IASB) the official international standard-setting body. The standards issued by the IASB are called International Financial Reporting Standards (IFRSs) (Schroeder, Clark, & Cathey, 2011, p. 82-87).

This research project will inform the reader of the difference between the United States accounting standards and International accounting standards. The United States uses the Financial Accounting Standards Board (FASB) to issue financial reporting procedures. The International Financial Reporting Standards (IFRS) are issued by the International Accounting Standards Board (IASB). There are proposals for the United States to adopt the International standards. Financial reporting procedures are debated about the United States using the Generally Accepted Accounting Procedures (GAAP) or following the global procedures. This

There is no universal GAAP standard and the specific vary from one geographic location or industry to another. In the United States, the Securities and Exchange Commission (SEC) mandates that financial reports adhere to GAAP requirements. The financial accounting standards Board (FASB) stipulates GAAP overall and the Governmental accounting standards Board (GAAP) stipulates GAAP for state and local government. Publicly traded companies must comply with both SEC and GAAP requirements. In recent years it also has had the chance to look at the United States Generally Accepted Accounting Principles (GAAP) and modify the rules to enhance clarity and consistency, intentionally setting itself apart from U.S. GAAP. The convergence of these two accounting frameworks is a must for both foreign and domestic businesses. The International Financial Reporting Standards (IFRS) is the accounting framework used by the European Union, Japan, Canada, and other world economic leaders. Companies need an accurate and reliable financial accounting systems not matter if globally or in the United

A joint convergence committee created the members of (FASB) and (IASB). (IASB) is recognized as an independent accounting standard-setting body that is similar to (FASB) that joins (GAAP), and is governed by the (IFRS) foundation. Due to this convergence, (AICPA) believes U.S. adoption of a single set of high-quality, globally accepted accounting standards will benefit U.S. financial markets and public companies by enabling preparation of transparent and comparable financial reports throughout the world, (American Institute of CPAs, 2016). Secondly, (AICPA) is dedicated to supplying the whole accounting profession with information, tools and IFRS.com for instance to assimilate as well as implement a new set of standards. As the (AICPA) supports continual convergence of reliable accounting standards between (IFRS) and (GAAP) the mission of completion between (IASB) and (FASB) is prolonged. (AICPA) will always support funding mechanisms of the body-making

Due to the controversy economies have had towards which method to use for accounting, there has been a compromise to converge the two most commonly used methods – GAAP and IFRS. However, these two methods are still very different. The convergence project has yet to be completed; in the meantime, more and more countries are running towards the IFRS since it is more reliable and relevant. The main difference between these two methods is the US GAAP is rule-based while the IFRS is principle-based; this means that the US GAAP makes its decisions based on research and literature, while the IFRS bases its decisions on patterns that result in facts. A deeper look into the differences between these two methodologies shows

Măciucă, Ursache, Moroşan, and Apetri (2014) state IFRS and GAAP are two similar systems but they are not identical. IFRS has been accepted by the U.S. since 2008. Prior to 2008, companies had to reconcile financial records into GAAP format. Financial Accounting Standards Boards (FASB) and International Accounting Standards Boards (IASB) must continue to merge both standards for the benefit of all. Smith (2012) analyzed the financial data from international companies operating in the U.S. in 2005 and 2006 and discovered no significant differences between GAAP and IFRS. The differences between GAAP and IFRS can be cosmetic and substantive (p.

The International Accounting Standards Board (IASB) with the objective of developing globally accepted standards establishes the International Financial Reporting Standards (IFRS). On the other hand, the Financial Accounting Standards Board (FASB) establishes the General Accepted Accounting Principles (U.S. GAAP) with the mission to improve the standards. In 2015, Hoyle, Schaefer, and Doupnik concluded, there are three key differences between the two, including recognition differences, measurement differences, and presentation and disclosure differences. Whether or not to recognize an item, how an item is recognized, or when it is recognized are the main differences regarding the recognition differences. For instance, research and development

In the most basis sense, a contingent liability is an obligation that has a probability of occurring in the future. These items will not be included in financial statements, but should be disclosed within the notes. The company will also be required to measure the nature of the contingent liability in subsequent accounting periods (Ernst & Young 2014). An example of IFRS Contingent Liability would be a company that was involved in an accidental environmental spill in the ocean. The potential fines imposed by a governed

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are working together to eliminate a variety of difference between the United States generally accepted accounting procedures (U.S. GAAP or GAAP) and International Financial Reporting Standards (IFRS). This convergence project grew out of an agreement reached by the two boards in 2002 (Deloitte, 2004).

The US Generally Accepted Accounting Principles (GAAP) is a set of international accounting rules which originated from the United States. US GAAP can be defined as a set of accounting principles, standards and procedures that companies use to compile their financial statements (Elliott & Elliott, 2008). The International Financial Reporting Standards (IFRS) on the other hand are accounting rules originating from the United Kingdom. International Financial Reporting Standards (IFRS) are a set of accounting rules designed with a common global language for business affairs so that financial accounts of companies are understandable and comparable across international boundaries (Devinney, Pedersen & Tihanyi, 2010).

In the United States, Generally Accepted Accounting Principles (GAAP) outlines for accountants the acceptable practices regarding the preparation of financial statements. GAAP, developed by the Financial Accounting Standards Board (FASB) and known for being more "rules-based," specifies the presentation of financial data on the balance statement, income statement, and statement of cash flows. While certain circumstances allow for deviation from GAAP, those deviations must be disclosed. Internationally, accounting standards are under the eye of the International Accounting Standards Board (IASB) and referred to as International Financial Reporting Standards (IFRS), which is known for being "principles-based"

The International Accounting Standards Board (IASB) and U.S. Financial Accounting Standards Board (FASB) have been working on convergence of U.S. GAAP and IFRS since 2002, but it has been a challenging process on combining the standards between U.S. GAAP and IFRS, especially when there are two set of approaches on standards, where U.S. GAAP is rules-based and IFRS is principles-based. The U.S. GAAP is rules-based by following a set of guidelines opposed to IFRS, is principles-based by having an objectives of good reporting and provides the best judgement on the guidance to a specific circumstance. It takes a lot of effort to converge accounting standards between U.S. GAAP and IFRS, such as training personnel on the new policies and procedures, updating the accounting policies, improving a new information system, and updating internal control procedures, which you can see the reason American companies is reluctant on this transition. Just like any new updates in standards, it has its issue and difficulty as in the cost of transition, the resources to make the changes, and a period where financial reporting will be unable to have the comparability for financial statement users. Bottom line, transition is a messy process and have its complexity.

International Financial Reporting Standards (IFRS) are a set of accounting standards that are developed by the International Accounting Standards Board (IASB). This accounting standard is followed by approximately 130 countries as propagated by IASB. IASB is an independent accounting setting body that is based in London. It consist of 14 voters from multiple countries, including United States. Another accounting standard that is being followed is USGAAP that was promulgated by International Accounting Standard Committee (IASC). There has been a serious project going on for the convergence between IFRS and USGAAP from the very beginning of formulation of IFRS in 2001.

International Financial reporting standards (IFRS) and General accepting accounting principles (GAAP) convergence issue began in the late 2000’s. International Financial Reporting Standards (IFRS) are a set of standards stating how particular types of transactions and other events should be reported in financial statements. Therefore, business and accounts can be understood from company to company and country to country. General accepting accounting principles (GAAP) are set of common accounting principles, standards and procedures that companies use to produce their financial statements. GAAP are a combination of accurate standards that are simply the commonly accepted way of recording and reporting accounting information.

Accounting standards are guidelines for valuing and reporting every item in the financial statements. US GAAP is a rules-based accounting framework. This type of framework follows a strict set of rules that are to be followed when accountants are preparing financial statements. IFRS are principle-based standards which provide a framework for decision making rather than provide specific guidelines as the US GAAP. It is not clear on the possibility of the IFRS evolving into rules-based standards until they are thoroughly scrutinized by both practitioners and the judicial system. IASB