Gaap Financial Accounting Essay

1118 words - 4 pages

At any location in the world, each nation or economy has their own set of accounting standards. Performing business in a world where globalization is becoming more prevalent requires the understanding of GAAP of different countries. Knowing the principles and standards of different GAPP is definitely a key asset to anyone who wants their business to be successful and to fulfill the needs of their business. To get a better understanding, we will compare the standards of US GAAP, and Canada GAAP. We will also examine how much influence that GAAP in the United States has such a large influence to the Canadian GAAP. Finally, we will explore how the Sarbanes Oxley Act binds all corporations to follow the guidelines for financial accounting and reporting.USA GAAPIn the U.S., generally accepted accounting principles, commonly abbreviated as US GAAP or simply GAAP, are accounting rules used to prepare, present, and report financial statements for a wide variety of entities, including publicly-traded and privately-held companies, non-profit organizations, and governments. Generally GAAP includes local applicable Accounting Framework, related accounting law, rules and Accounting Standard.CANADA GAAPCanada is on the edge of a substantial change that will change the way companies financially report to their investors and stakeholders. Adopting international accounting standards will impact Canadian investors and businesses, and change the way financial information is reported in Canada."Generally Accepted Accounting Principles (GAAP) of Canada provides the framework of broad guidelines, conventions, rules and procedures of accounting" (Wikipedia, 2006, Para. 1)."In Canada, professional development paralleled that of the United States. In 1936, the Terminology Committee of the Canadian Institute of Chartered Accountants (CICA) formed and was asked to take steps to encourage greater uniformity in the use of accounting terms by its members. In 1939, the establishment of a joint research program with Queen's University culminated in the establishment in 1946 of the Accounting and Auditing Research Committee. The aim of the committee was to improve the quality of judgment exercised in both accounting and auditing and to provide guidelines for communicating financial information and economic facts and for auditing procedures and techniques"(Wikipedia, 2006, Para. 2 & 3).In Canada, the accounting standards are set by the Accounting Standards Board of Canada (AcSB). AcSB establishes financial accounting and reporting standards for use by Canadian companies and not-for-profit organizations. The international standards are set by the international Accounting Standards Board (IASB).According to Accounting Standards in Canada: Future Directions Draft Plan prepared by Accounting Standards Board, the role of US GAAP in Canada has been discussed as market pressures subsequently persuaded some Canadian multinational public companies to move as close as they practically...

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