The globalization of the world’s capital markets has created an increasing need for comparable, detailed and transparent system of financial reporting making it imperative to establish one set of high quality global accounting standards (Gornick-Tomaszewski, S., & Showerman, S.2010). Currently, there are two sets of accounting standards that are generally accepted for international financial reporting- The U.S. GAAP ( Generally Accepted accounting Principles ) which have been developed by the Financial Accounting Standards Board (FASB) and the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board(ISAB) (Kieso, D.E., Weygandt, J.J., Warfield, T, D, .2013. To bring about uniformity in financial reporting many countries around the world have agreed to accept IFRS as the global accounting standard to be used for preparing the financial statements of public traded companies (Gornick-Tomaszewski, S., & Showerman, S.2010). IFRS can be defined as a comprehensive, high quality set of accounting standards, rules and interpretations used in preparation of financial statements (Gornick-Tomaszewski, S., & Showerman, S.2010).Currently, over 115 countries in the world use IFRS for reporting financial statements of domestic companies. The European Union has mandated that all listed companies in Europe use IFRS to make their information more comparable and less complex to the users (Kieso, D.E., et al, 2013). However, in the U.S. there is complexity in reporting financial data. The reason for this complexity arises from the fact that U.S multinational companies with subsidiaries listed in foreign stock exchanges can prepare their financial statements using U.S. GAAP while foreign public corp...
... middle of paper ...
...ational+financial+reporting+standards+%3A+are+they+right+for+the+united+states.+The+journal+of+global+business+issues+volume+7+issue+2
Gornick-Tomaszewski, S., & Showerman, S. (April 2010).IFRS in the United States: Challenges and opportunities. Review of Business, 30(2), 59-71. Retrieved from http://www.readperiodicals.com/201004/2113499381.html Or, A. (May 2012).Perspectives on eventual IFRS adoption. Retrieved from http://www.albany.edu/honorscollege/files/Or_Honors_Thesis.pdf
Kieso, D.E., Weygandt, J.J., & Warfield, T.D. (2013).Intermediate Accounting, 15th edition. John Wiley& Sons, Inc.
Chasan, E. (February 4, 2014).SEC’s new strategic plan backs away from IFRS.CFO Journal. Retrieved from http://blogs.wsj.com/cfo/2014/02/04/secs-new-strategic-plan-backs-away-from-ifrs/
IFRS FAQs (2014). AICPA IFRS Resources. Retrieved from http://www.ifrs.com/ifrs_faqs.html
Gill L. (June, 2012) IFRS: Coming to America Whitehouse T. (December, 2013). Foundation Says IFRS Becomes Global Preference.
Donal E. Kieso, Wegandt J. Jerry, Warfield D. Terry. (2012). Intermediate Accounting. Hoboken, NJ: Wiley.
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.
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
Logue, A. C. (2014, April 21). Comparing U.S. GAAP and IFRS Accounting Systems. Retrieved from Dummies:
The convergence project between the United States Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS)/International Accounting Standards (IAS) started in 2002. The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) met to discuss a joint commitment to develop a set of high quality standards that could be compatible internationally. The commitment was called the Norwalk agreement. The thinking behind the agreement is that it could improve international business relationships and allow financial statements to be compared across the world (IFRS, 2016).
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 Rosens charge that IFRS is a step backward and gives companies too much leeway when it comes to reporting. A company, for example, can record revenue if management believes there is a 50.001 per cent probability of collecting the cash. The situation makes it difficult for investors to truly gauge profitability-and it's made worse by the fact that companies use different estimates to calculate the value of their plants, and they're not always transparent
Since 1973, FASB has been the private sector organization designated to establish standards of financial accounting and reporting. Lending authority to its designation is the recognition of the SEC and the American Institute of Certified Publi...
In 2001 IASC was restructured into the better financed IASB, under the supervision of a new IFRS foundation. During the 12 years of IASC, the IASB has introduced many new standards under IFRS and has overtaken the natural standard from IASC. More than 100 authorities have adopted IFRS but the weird thing happened during that time that IASB and IFRS did not took close
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.
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.
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.
The third organization that helps to regulate the accounting standards is the IASB. “Our mission is to develop, in the public interest, a single set of high quality, understandable and international financial reporting standards (IFRSs) for general purpose financial statements”(IASB 2008,¶ 1). The IASB consists of a board that is made up from nine different countries with the sole purpose of expanding accounting standards. Their main hope and goal is to one day that there will be only one set of accounting standards that will be used throughout the world.