The GAAP (US Generally Accepted Accounting Principles) is the accounting standard used in the US, while IFRS (International Financial Reporting Standards) is the accounting standard used in over 110 countries around the world. The GAAP is considered a more “rules based” system of accounting, while IFRS is more “principles based.” Soon, the U.S. Securities and Exchange Commission is looking to switch to IFRS by 2015. The Comparison highlights some significant U.S. GAAP and IFRS requirements, which we believe are most commonly encountered in practice. This Comparison may be helpful to individuals that are new to IFRS who are trying to gain an appreciation of the more significant requirements of IFRS and how these requirements differ from those in the United States.
GAAP principles have received a lot of support from substantial authorities. The AICPA’s code of conduct directs that its members should prepare their financial statements based on GAAP guidelines. For example, AICPA Rule 203 forbids a member from articulating an unprofessional opinion on financial statements that have deviated from adhering to GAAP principles. GAAP principles come from the several organizations. It is composed of a combination of more than 2,000 documents that have been used for approximately 60 years or so. It incorporates such items as FASB Standards Staff Positions and interpretations; APB inputs; and AICPA Research reports. A differing format in the documents that comprise GAAP, inconsistency and difficulty in interpretation make financial preparers to be unsure whether they have the right GAAP. This makes it hard for them to determine whether what they have prepared is authoritative or not. These facts led FASB to develop the FASB accounting standards codification or
The accounting principles are constantly changing. Currently, there is a struggle between accountants who want to use the U.S. Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). Many companies in the United States prefer GAAP over IFRS because GAAP is more rule based, whereas IFRS is principles based. In my accounting classes, we focus on GAAP. If the U.S. decides to switch to IFRS, I will not be as well-equipped when I enter the work force. The best way to overcome this threat is to continue to monitor the situation and see if the U.S. makes the switch.
In accounting, private companies are treated differently than governmental and non-profit companies. However governmental and non-profit companies use different reporting requirements from the private sector. The requirements for governmental companies use the Government Accounting Standards Board (GASB), whereas profit and non-profit companies use the Financial Accounting Standards Board. This paper will explain the purpose, discus the similarities, and differences between the GASB and FASB.
In this report, we will discuss the significant difference between U.S. GAAP and IFRS and its influence on Canadian companies. Canada adopted IFRS in 2011 while the United States is still using GAAP as their main accounting regulations. Due to the tight economic ties and geographical proximity between the two countries, the difference between rule-based U.S. GAAP and principle-based IFRS will have an overwhelming influence on the Canadian companies that operate largely in the US, merge with US companies and listed on the US stock exchange.
General accepted accounting principles (GAAP) are considered to be the framework guidelines for financial accounting and jurisdiction of all accounting standards. The (GAAP) includes standards, conventions and the rules that the organization accountant follows when recording and summarizing all the transactions when preparing the financial statements. Third parties that are involved with the reports rely on the information to be free from bias and inconsistency without debate. All business states that, “generally accepted accounting principles are guidelines precisely, are a group objectives and conventions that have been established over time to set how financial statements are prepared and presented (Corporate Government 2010). There is a precedence that takes place when dealing with the finances of different organization. The organizations that deal with any type of financial data must comply with GAAP standards so that outside creditors can view their financial statements with little or no difficulty. For example Financial Accounting Standards (FASB) is private not-for-profit organization that oversees the majority of the different organizations within the United States including the healthcare industry.
The success of a company is very dependent upon its financial accounting. In accounting there are numerous Regulatory bodies that govern the accounting world. These companies are extremely important to a company because they set the standards when it comes to the language and decision making of a company. These regulatory bodies can be structured as agencies, associations, commissions, and boards. Without companies like the Security and Exchange Commission (SEC), The Financial Accounting Standards Board (FASB), the Governmental Accounting Standards Board (GASB), Internal Accounting Standards Board (IASB), Internal Revenue Service (IRS), and other regulatory bodies a company could not make well informed decisions. In this paper the author will look at only four of them.
The globalization of business has resulted in the need for compatible accounting standards that can be used internationally for financial reporting. As a result, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) to unify the various financial reporting methods and create a single accounting standard which can be applied to any financial statement worldwide (Byatt). The global standardization of financial reporting will increase the readability and enhance comparability of globally traded companies’ financial statements, without the need of conversion or translation. There are a few main differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (U.S GAAP). The increasing recognition and acceptance of the International Financial Reporting Standards by accounting professionals in the United States, will affect the way in which the U.S will record financial statements in the future.
There are general rules and concepts that preside over the field of accounting. These general rules, known as basic accounting principles and guidelines, shape the groundwork on which more thorough, complex, and legalistic accounting rules are based. The Financial Accounting Standards Board (FASB) uses the basic accounting principles and guidelines as a foundation for their own comprehensive and complete set of accounting rules and standards.
According to business, or any organization, Accounting plays a major role in developing and growth of the business. Financial standards of the organization expected as the complexities of business growth and expansion. Hence determining the implementation of the standards can vary according to the type of industry, business or organization.