This report will discuss the convergence of IFRS and GAAP, it will cover some of the similarities and differences between the two, go over risk for companies as well as ways for companies to prepare.
IFRS and GAAP and what convergence means.
In financial surprise accounting the objective for financial reporting are to provide useful information for potential investors and creditors, assessing cash flow, and about claims and changes to company resources. The problem with this is that, without standards each company would set their rules, and readers of financial reports would have to learn every company’s way of reporting information. It would become easier for them to report what makes them look better and hide imperfection. Furthermore, with each company preparing different types of statements, it would almost be impossible to compare to another. So to overcome this problem and to make sure that financial reports are fair, clear and completely show a company’s financial operation, the accounting profession developed a set of standards that are generally accepted and universally used. These standards are decided by the Financial Accounting Standards Board (FASB) and are called generally accepted accounting principles (GAAP). International Financial Reporting Standards (IFRS) is a 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 (IASB). The goal with IFRS is to make international comparisons as easy as possible. This is difficult because, to a large extent, each country has its own set of rules. For example, U.S. GAAP is different from Canadian GAAP. Synchronizing accounting standards across the globe is an ongoing process in the international accounting community. In terms of accounting the ultimate goal of convergence is a...
Cited: FASB, International Convergence of Accounting
Standards (2011)Website: http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156245663
AICPA, Website: http://www.ifrs.com/pdf/IFRSUpdate_V8.pdf
International Financial Reporting Standards (2011). Website: http://www.investopedia.com/terms/i/ifrs.asp
Corporate Taxation Insider, Charles Swenson (2009) Website: http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2009/Tax/IFRS.jsp
Preparing for IFRS, McGladrey & Pullen(2011).Website: http://www.rmahq.org/NR/rdonlyres/505E5158-7701-48F8-855C-F61CE5F79A86/0/RSMMcGladrey_ifrs.pdf
Please join StudyMode to read the full document