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Regulatory Bodies Concerning Transocean Vs. Chevron

1741 words - 7 pages

Accounting regulations are a very fundamental requirement within industries of today. Over the past few decades, many issues arose due to the lack of accountability and trustworthiness among large businesses, and these issues led to large scale effects on the business world as a whole; domestically well as internationally even in some instances.In the following paper, regulatory bodies such as: GAAP, IFRS, SEC, and PCAOB will be discussed in connection with two major companies within the oil industry: Transocean and Chevron. Accounting reporting criteria and how it differs between these two major companies will also be discussed.When looking at domestic and global companies using Chevron and Transocean as examples, the regulatory environments have many similarities. As publicly traded American companies, these two businesses are required to adhere to standards and regulations established by United States regulatory bodies such as Financial Accounting Standards Board (FASB), which establishes Generally Accepted Accounting Principles (GAAP) standards in the US. Due to international operations, standards established by the International Accounting Standards Board (IASB) must be followed. The main purpose of the IASB 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 2009). As a result of the multitude of accounting policies and regulators that these companies must be accountable for, financial recording practices need to be more complex than domestic only companies.GAAPGAAP standards vary from country to country. To begin, US GAAP is very similar to IFRS. In 2008, the U.S. Securities and Exchange Commission (SEC) proposed that IFRS replace U.S. GAAP for U.S. public companies in 2010 to be completed by 2014 (Epstein, 2008). Surprisingly, accounting standards in compliance with IFRS are less detailed than those of the U.S. GAAP. However, convergence is important for those who participate in the global market.IFRSDespite the possibility of accepting the IFRS, U.S. companies are still required to follow the U.S. GAAP. The following are some examples of differences between the two standards. The 2008 website shows that the pooling of interests method is exceptionally used only when strict criteria are met with the IFRS versus the U.S. GAAP purchase method only. Goodwill is strictly amortized with impairment with IFRS and is not amortized with the U.S. Assets are measured by the recoverable amount in IFRS versus the fair value in the U.S. Retirement benefits are handled differently in that gains or losses are strictly amortized in IFRS without corridor while they are corridor amortized in the U.S. The scope of subsidiaries in consolidated financial statements is based on control in IFRS and is based on majority voting interest in the U.S. The U.S. and IFRS also have many similarities in the measurement of securities,...

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