It was not so long ago that the mention of International Financial Reporting Standards (IFRS) immediately conjured up thoughts of convergence with United States Generally Accepted Accounting Principles (US GAAP), which then evolved into the four major projects that is financial instruments, insurance, leases and revenue. But today, the key words are ‘comparability’ and ‘consistency’. Comparability of information prepared under USGAAP and IFRS, instead of convergence of the two frameworks, and consistency of application and consistency of enforcement of IFRS around the world. In today’s marketplace IFRS has a discrete advantage over USGAAP. The fact is that IFRS is either permitted on required in over 120 jurisdictions while US GAAP is required in one.
Definition and Meaning of IFRS and USGAAP
International Financial Reporting Standards (IFRS) is the term used to indicate the entire body of International Accounting Standard Board (IASB) authoritative literature. Any entities asserting compliance with IFRS complies with all standards and interpretations, including disclosure, requirements, and makes an explicit and unreserved statement of compliance with IFRS. The prime requirement of IFRS is for the financial statements to give a fair presentation. Generally Accepted Accounting Principles (GAAP) is the term that applies to all the broad concepts and detailed practices to be followed in preparing and distributing financial statements. It incorporates all the conventions, procedures and rules that comprise accepted accounting practice. The Financial Accounting Standards Board (FASB) is responsible for establishing US.GAAP in the United States. (IFRS compared to USGAAP, 2012, pp. pages 1-11)
Differences between IFRS and USGAAP
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