In 1973 the Financial Accounting Standards Board (FASB) was established to set the financial accounting standards in the United States of America for nongovernmental entities. These standards are collectively called U.S. Generally accepted Accounting Principles, or U.S. GAAP. The Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants acknowledge the authority of these standards (FASB, n.d). A “proven, independent due process” is used to collect the viewpoints of the financial statements prepares and users for the constant improvement of these standards. An Accounting Status Update(ASU) is not an authoritative source however documents the amendments to communicate the changes in the FASB Codification for a user to understand the reason and future of those changes (FASB, n.d).
This paper examined the relationship between U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) and found that merging both accounting standards into one “worldwide” standard would be ideal for all investors. This paper analyzed GAAP and IFRS differences and similarities. A comparison and contrast of GAAP and IFRS was conducted. Discuss roadblocks to achieve “worldwide” accounting standards. GAAP and IFRS have to
The Accounting Standards Update requires improved presentation and disclosures to enable the not-for-profits issue out
The IFRS are superseding GAAP as the official reporting structure of many countries and as of July 2014, 283 have adopted the IASB’s new rule book (PricewaterhouseCoopers, 2014). The transition to IFRS has spawned a worldwide dialog of investors and analysts discussing the effects it will have on reporting and the implications this move carries into the future. This paper will review some financial reporting standards, the major distinctions between the U.S. GAAP and IFRS, and the competitive advantages and disadvantages of altering the U.S. reporting structure.
o October 3rd - 4th : European leaders issue a response to the American changes in policy by announcing that they will be reviewing and adjusting their own policies in the interest of keeping European banks competitive. Since they have very little time before Q3 reports, they make it clear that their intention is to change quickly. Although they do not at this point specifically state the need for IASB changes, they do announce their intention to align with the US to stay competitive, and therefore an IASB change is all but guaranteed.
The IASB and FASB have been working on a project together to minimize the differences in the way financial statements are presented to the public. Some of the major changes that we will notice in the statements are the adoption of the International standards. The information portrayed will be the same with some changes in the organization of the data. The changes are said to bring more understanding to the interpretability of financial statements as a whole.
On February 26, 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which revised the standards on leasing. The intent for this revision was to improve how leases are being reported on the financial statements. The consensus is that the classification tests in current use for making this determination fail to provide a faithful and accurate representation for leasing transactions in general. In 2005, the U.S. Securities and Exchange Commission had also made recommendations which indicated this need for change in regard to how leases were being reported. Overall, it is believed that this change would ensure greater transparency in the financial statements concerning these type transactions.
This paper follows the previous papers showing that there are needs for harmonization across the globe in order for accounting standards to not be affected in a negative way. The best way to make this happen is by adopting the same set of standards across the globe and stick by them. This paper will show how the adoption of these standards will benefit countries globally by using the United States alone as an example. As a matter of fact, the effects on U.S. reporting practices are likely to be limited. Nonetheless, there could be a significant impact accounting reporting processes and systems. Therefore our focus will be on the costs to implement the solution. The major out-of-pocket costs will probably occur during the transition phase,
The updated revenue recognition standard is expected to greatly change the revenue recognition process for the telecommunication, real estate, and software industries. In this section, we will go through an example that illustrates the potential changes for each industry.
Winston Churchill once said that “there is nothing wrong with change, if it is in the right direction” (Thinkexist.com) . Today, the accounting profession and standards in the United States is facing one of the biggest changes it has seen in a long time: the convergence of its Generally Accepted Accounting Principles (GAAP) to the International Financial Reporting Standards (IFRS). Is this a step in the right direction for the United States? The debate is still alive, although the change is happening now. In this paper I will explain the convergence and then describe some of the advantages and disadvantages to this change.
In the global business arena, there are two main institutions whose accounting standards are used for financial reporting, Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). The IFRS, whose rules are established and maintained by the International Accounting Standards Board (IASB), is the most widely used of the two institutions but the primary choice for the United States continues to be GAAP, whose standards are established and maintained by the Financial Accounting Standards Board (FASB). Although both systems have many similarities, there are a variety of significant differences that have a great impact on how reporting amounts are calculated and reported to the general public.
The proposed standards mentioned above would affect the current practices in several ways. When adopted, the proposed standard will replace IAS 18 Revenue, IAS 11 Construction Contracts and related Interpretations. In US GAAP, it would replace the guidance on revenue recognition in Topic 605 of the FASB Accounting Standards Codification. The following section will explain some of the differences between the current US GAAP standard and the proposed model.
The Financial Accounting Standard Board (FASB) was established in 1973 to guide nongovernmental entities in the presentation and reposting of financial statements. Their mission is to “establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports” (Financial Accounting Standards Board, 2016). Throughout the years, the FASB has diligently accomplished their mission, specially by issuing Accounting Standard Updates (ASUs) that help amend the standards in those
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) oversee the standards for both the US GAAP (Generally Accepted Accounting Principles) and the IFRS (International Financial Reporting Standards). With the proliferation of global business and ever growing markets, an attempt has been made within the last ten years to align both standards the two standards. The US GAAP has always given the guidelines and steps for American companies to follow when preparing their financial statements. Whereas the IFRS has always been more of standardized language to use in accounting practices internationally. The following is a brief analysis of changes, differences and outcomes from this transition.
Hans Hoogervorst is chairman of the International Accounting Standards Board (IASB), and his stand on the International Financial Reporting Standards (IFRS) has been firm for many years. With more than 100 nations that have implemented IFRS, it’s no surprise Hoogervorst believes the U.S should accept the IFRS and follow the steps of other leading market countries. By starting to allow public companies to volunteer their transition, Hoogervorst believes would be a step in the right directions (Lamoreaux, 2011). Since many of the U.S. trading partners have already accepted the IFRS, Hoogervorst finds it hard to imagine the U.S. not accepting it in the future (Lamoreaux, 20100).