Convergence of gaap and ifrs study paper
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Excerpt from Analysis Paper:
In this buy of tips:
a. The main financial statements requested within the GAAP and the IFRS will be virtually a similar
b. In terms of standards employed for setting environmental surroundings, the IFRS use the criteria of the IASB whereas the GAAP use the standards of FASB. The 2 boards implement similar way of setting the criteria
c. The conceptual frameworks for IFRS and GAAP are highly similar
d. It process is a same for both accounting standards (double entry recording)
e. The two GAAP and IFRS demand a balance sheet and an income statement and the harmony sheets and income statements completed below two sets of principles are highly comparable
f. The accounting and repotting of cash is practically the same
g. Both GAAP and IFRS require solid internal control systems in order to comply with the accounting rules
h. The accounting of receivables is usually virtually a similar
i. With regards to the recording of intangible assets, the mechanisms in the two GAAP as well as IFRS require the expense of costs in the research stage
j. Both GAAP and IFRS need economic real estate agents to present their very own liabilities on the commencement with the balance sheet
t. The accounting of the issuance of inventory to the investors is also identical
l. Regarding statements of cash flow, “both IFRS and GAAP need that the assertion of cash runs have 3 major sections – operating, investing and financing – along with changes in money and cash equivalents, and both enable use of the indirect or perhaps direct method” (Weygandt).
5. Risks of convergence
Just like any other international sensation, the concurrence of the Foreign Financial Revealing Standards and the Generally Acknowledged Accounting Concepts is both equally praised and also condemned. One particular the one hands sit people who argue that the convergence will lead to the formation of a standardized accounting and reporting system which could subsequently decrease the burdens of international and reporting affairs. On the other hand, you will find those who argue that the convergence would result in a series of dangers. Among them the pursuing:
The reporting standards developed by the IASB and by the FASB are required to undergo major changes, because they search for prevalent grounds around the convergence of IFRS and GAAP. This will generate severe challenges for the exclusive companies presently using GAAP.
The educational product is not prepared to welcome the convergence with the two systems and the subject matter teaching accounting and revealing, including the software program systems, can be overwhelmed by changes
There exists a highly vivid risk the companies in the United States would not always be asked to go to the IFRS system in replacement of the GAAP, although that they would be asked to include the IFRS system for the GAAP. This sort of a situation would significantly improve the financial and reporting complexities of the American economic agents (Pounder, 2010).
References:
Pounder, B., 2010, IFRS risk: not everything you think, CFO Magazine, http://www.cfo.com/article.cfm/14497802 last utilized on Aug 11, 2010
Robertson, M., 2009, PUNTA official learning system economical management, 6th edition, Butterworth-Heinemann
Weygandt, L. J., 2009, Financial accounting, 7th model, John Wiley and Kids
2008, Worldwide Accounting and Reporting Issues: 2007 Assessment, United Nations Magazines
2010, The move to global specifications, IFRS Web page, http://www.ifrs.org/Use+around+the+world/Use+around+the+world.htm previous accessed about August
