The objectives of financial report are different from each country, therefore, the worldwide market use the financial report from different countries all over the world following one practice standard. To respond to the need of this worldwide market, the US public companies must do the dual reporting to disclose and to present comprehensible information to the international investors and creditors. Statement of the Problem The dual reporting has been done by US public companies to attract more investors and creditors in the global market. The global market makes the US companies already doing their reporting under GAAP to file another reporting under IFRS. Unfortunately, the U.S. public companies are taking a long time to finish the dual reporting due to the difficulties they confront or the challenges in the business to convert to IFRS and the intention deferred of SEC to apply the IFRS in U.S. even the FASB was taking an action for the conversion. Research Question The purpose of this thesis is to determine what the U.S. public companies must do on their financial reporting to attract more investors and creditors in the global market? In addition, what are the consequences of the actions taken by the US public companies to convert to IFRS? To answer these questions, the following sub-questions will be addressed: 1. What modifications in the reporting financial can be performed to attract more investors and creditors in the worldwide market? 2. What are the implications of converging U.S. GAAP and IFRS? 3. What are the advantages and disadvantages of using the IFRS? 4. How are the US public companies affected by the adoption of IFRS in the global market? Significance of the study This study is particularly si... ... middle of paper ... ...cial statement and the impacts on the flow of funds. Chapter 4 - Research Question Findings. The implications of converging U.S. GAAP and IFRS. This chapter deals with the difficulties and the challenges that the US public companies face. Chapter 5 - Research Question Findings. The advantages and disadvantages of using the IFRS. This chapter explores the details of the IFRS as well the need of adopting the IFRS. Chapter 6 - Research Question Findings. The US public companies affected by the adoption of IFRS in the global market. This chapter shows the way that the US public companies concerned by the adoption of the IFRS in the global market Chapter 7 - Summary and Conclusions. This chapter restates the problem and the research questions, summarizes the findings from the research and presents the conclusions to the research questions drawn from the research.
Switching to IFRS will help not just companies but also investors and public globally to compare financial statements. If every country has different financial standards, if would be problematic to compare how each company stands because they are not the same.
U.S. GAAP and International Financial Reporting Standards (IFRS), formerly known as iGAAP, are two accounting standards used in today’s world of financial reporting. These standards have differences as well as similarities in reporting requirements. Organizations in the United States are required to follow GAAP principles in preparing financial statements and other financial reports. Whereas, organizations outside of the United States may follow IFRS. Balance sheet reporting and formatting is an area in which GAAP and IFRS may differ, yet be similar in many respects. The balance sheet is a financial statement of what a company owns and what it owes at a given date and time (Spiceland, Sepe, & Nelson, 2013). This paper will address differences and similarities in respect to balance sheet reporting and formatting as it relates to fixed assets and liabilities, inventory, and goodwill.
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.
We would love for these impacts to always have a positive impact; however the impact can affect a company in a negative manner. “ Researchers Holger Daske, Leuz Hail, Christian Leuz and Rodrigo Verdi examined 3,100 firms in 26 countries mandated to adopt IFRS in “Mandatory IFRS Reporting around the World: Early Evidence on the Economic Consequences”. The study examines the economic effects of IFRS, both early and mandated adoption” (Bolt-Lee). They were able to conclude that a company’s adoption of IFRS creates strong economic benefits in countries with rigid regulation over financial reporting. The article also explains that these benefits include an increase in the stock’s market value, an increase in market liquidity, and a lower cost of capital. Companies with major differences between GAAP and IFRS standards show the greatest benefit when supported by a strong regulatory
I enjoyed the research that had been done in regards to the multinational company I selected, Whole Foods Market, and the International Financial Reporting Standards (IFRS). The primary purpose of the IFRS is to provide a global framework for public companies to follow when preparing financial statements. While Whole Foods Market follows US GAAP accounting principles, there is a need to adopt international financial reporting standards since the entity conducts international transactions in different countries. IFRS can improve the quality of financial reporting as it provides consistent accounting policies and practices. Therefore, improving the transparency and comparability of the financial statements. In
According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The primary users are investors, creditors, and those who advise them. It goes on to define the criteria that make up each potential user, as well as, the limitations of financial reporting. The FASB explicitly states that financial reporting is “but one source of information needed by those who make investment, credit, and similar resource allocation decisions. Users also need to consider pertinent information from other sources, and be aware of the characteristics and limitations of the information in them” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine whom the financials should be catered towards and what level of prudence is necessary for quality judgment.
In the world of international finance there are two major accounting systems; GAAP, which stands for Generally Accepted Accounting Principles, and IFRS, which stands for International Financial Reporting Standards. The United States prefers GAAP while the European market, as well as many other countries, prefers IFRS. By 2015 the Securities Exchange Commission is anticipating a total transfer to IFRS in the United States. Though the differences between GAAP and IFRS are few, they could affect accuracy of financial reporting throughout the world. It is important to understand the differences and similarities between both GAAP and IFRS if one is to globalize ones market (Logue).
The US companies are not expected to fully approve IFRS or the IASB, since it eliminates their control over financial standards globally and IFRS has the accounting standards that are quite different from the US standards upon which many decisions in the country have been made. Though, the SEC try to converge both the Boards and the concepts, the disparities between the two imply that it may take few years to set up a standard accounting Board that the USA would approve.
The project has three goals to achieve, to maintain main source of information towards jurisdictional progress and reply to that many dissimilarities of IFRS exist over the world and also to recognize how the IFRS foundation can make attractive path while they adopt IFRS. To achieve all of those goals, IFRS is collecting more information across the world and publishing profiles about how it is used in appropriate way and also by doing survey they actually can have a idea , how it has to be done and fixed those errors in that
Schofield (2014) researches the difference between public and private company financial reporting. For instance, a private company has fewer consumers reviewing their financial statements, whereas public companies could have multiple consumers reviewing financial statements. In addition, private companies typically have less specialized accounting personnel, whereas public companies will have several. Lastly, Schofield (2014), reviewed the number of amendments proposed and finalized to help benefit private companies financial reporting.
So it appears that there would be some advantages for many aspects, such as accounting quality, when applying IFRS into various countries. Because IFRS would be able to exclude different options of accounting from national accounting standards which could reduce the divergence of management.[ Ahmed, A. S., Neel, M., & Wang, D. (2013). Does mandatory adoption of IFRS improve accounting quality? Preliminary evidence. Contemporary Accounting Research, 30(4), 1344-1372.](Ahmed, Neel & Wang, 2013) This change is likely to be more advantageous for more users, preparers and auditors to make their economic decisions. (Ramanna & Sletten, 2009)[ Ramanna, K., & Sletten, E. (2009). Why do countries adopt international financial reporting standards?. Harvard Business School Accounting & Management Unit Working Paper, (09-102).] Therefore, these expectations of changes would be beneficial for their local economic
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.
The Corporate Law Economic Reform Program No 9 discussion paper, recommended that Australia adopt the International Financial Reporting Standards (IFRS) which commenced 1st January 2005. A key driver for this recommendation was realization that Australia was part of an increasingly global network. It was suggested that adoption of the IFRS would lead to “high quality, internationally accepted accounting standards which will facilitate cross border comparisons by investors”, (CLERP No.9 2003). A benefit of improved comparability of accounting information would be enhanced bilateral capital flows at a lower cost to Australian firms. This prompted much debate and expressed concerns in Australia with the IFRS introduction. Many of the concerns related to “a potential loss of autonomy and legitimacy in standard setting”, (Jones & Wolnizer 2003). They also suggest that “the perception that IFRS are of lower quality than local Australian standards”.
Financial statements: The statements are prepared in accordance with International Financial Reporting Standards (IFRS), thus the company accounts are understandable and comparable across international boundaries.
International Financial Reporting Standards (IFRSs) is a set of accounting standards developed by an independent, non-profit making organization popularly known as International Accounting Standard Board (IASB) which was created under the laws of state of Delaware, United States of America, on 8 March, 2001 (IFRS foundation) (IFRS.org, 2017) The objective of the IFRS is to present a unique and comparable accounting framework on how to prepare and disclose their financial statements globally. (Cotter, D., 2012) The most important change that occurred in the history of accounting was the adoption of International Financial reporting standards all around the world.