Ifras and Gaap

Accounting Research Paper

Professor Kapral

Intermediate 304

06/19/2011

Describe IFRS and GAAP and what convergence means:

IFRS is   set of international accounting standards stating how particular types of

transactions and other events should be reported in financial statements. IFRS are issued

by the International Accounting Standards Board.

GAAP stands for Generally Accepted   Accounting   Principles. A widely accepted set of

rules, conventions, standards and procedures for reporting financial information as

established by the Financial Accounting   Standards Board. Convergence associated with

accounting standards is a decisive strategic importance to the global capital markets.

Analyze how convergence will affect public companies, accounting firms, and small and medium companies

The different accounting standards may cause disruptions in valuations during the

transition from one set of accounting standards to the converged accounting standards

under IFRS.

Evaluate at least three significant differences and similarities between IFRS and GAAP and the impact these similarities and differences can have on financial statements

There are quite a few similarities between IFRS and US GAAP and the differences are

rapidly getting reduced owing to the convergence agenda of both these organizations. The

differences explained below are just a few significant ones and as of this point of time.

These can change due to developments in the convergence agenda of the IFRS and US.

1)Regarding revenue recognition, US GAAP is more detailed and industry-specific than
    IFRS.
2)Expense recognition has some differences with respect to the time period and expense
amount that can be recognized by the companies.
3)Some financial instruments that were recognized as equity by GAAP will be recognized as debt under IFRS.
Recommend three ways companies can prepare for IFRS and GAAP convergence

Because this change... [continues]

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