This website uses cookies to ensure you have the best experience. Learn more

The Differences Between The Gaap And The Ifrs Accounting Systems

1239 words - 5 pages

In the world of international finance there are two major accounting systems; GAAP, which stands for Generally Accepted Accounting Principles, and IFRS, which stands for International Financial Reporting Standards. The United States prefers GAAP while the European market, as well as many other countries, prefers IFRS. By 2015 the Securities Exchange Commission is anticipating a total transfer to IFRS in the United States. Though the differences between GAAP and IFRS are few, they could affect accuracy of financial reporting throughout the world. It is important to understand the differences and similarities between both GAAP and IFRS if one is to globalize ones market (Logue).
What is IFRS, and what is its significance in the world market? In 2001 the International Accounting Standards Board, or IASB, was created to develop a set of standards by which global financial statuses could be reported. According to, this set of standards, known as the International Financial Reporting Standards, or IFRS, falls under the jurisdiction of the IFRS Foundation, which is a non-profit, private and independently run entity that exists for the public interest, is based on four principle objectives. The first is to develop a single set of international financial reporting standards (IFRS). This set would be high in quality, readily understandable, easily enforceable, and acceptable world-wide. The second objective is to encourage the use of this set of standards in the international business world. Thirdly, the ISAB would like to monitor the needs of different sizes and types of businesses in different settings. The fourth objective is to promote the adoption of the IFRS by converging national accounting standards with the IFRS (International Financial).
Furthermore, a body of Trustees, each of whom differs from the others both professionally and geographically, oversees the IFRS Foundation and takes responsibility for making sure that the IASB remains independent and also that the organization is fiscally solvent. A Monitoring Board of public officials ensures the accountability of the Trustees. The IASB further develops and keeps current those accounting requirements that are the IFRS. A Stringent process is utilized to ensure the geographical diversity of the sixteen members. While IFRS are enforceable and globally accepted, the IASB does not have the authority to force anyone to use these standards. However, complying with IFRS requires that all standards and interpretations of IFRS be observed. The IASB created IFRS in the best interest of the public. Through due process, the IASB engages with regulatory bodies, investors, business leaders, and the world-wide accountancy profession. In addition, the global standard-setting community is also consulted. In short, while no country or entity is required to participate using IFRS, the Foundation does offer a set group of high-quality accounting standards understandable to the...

Find Another Essay On The Differences Between the GAAP and the IFRS Accounting Systems

The Differences Between an Electronic Medical Record and Clinical Information Systems

687 words - 3 pages Discussion A Describe the difference between EMR and Clinical Information Systems (CIS). What are the advantages and disadvantages of CIS’s? EMR is an electronic record of patient health information that is created by each encounter in any healthcare setting (Menachemi & Collum, 2011). Information in the EMR includes patient progress notes, medications, problems, vital signs, immunizations, laboratory and radiology reports and past medical

The Importance of convergence of IFRS and US GAAP

769 words - 4 pages The concern of companies could provide significant differences in financial information by adopting different set of standard had made convergence IFRS and US GAAP become important. For instance, although company value is not affected by accounting policies but valuation techniques like EBITDA multiples can be impacted due to earnings variations resulting from accounting policy differences between IFRS and US GAAP. (Bauman, DeSmith, Jones, Py

The conversion from GAAP to IFRS - a brief summary and analysis

1196 words - 5 pages users to follow broad principles. It gives less direct guidance, focusing on the true underlying economics and leaving more to the judgment of the financial user. Figure 1 is a brief summary of the major differences between GAAP and IFRS.Figure 1 Comparison between IFRS and GAAPAn example - Method of InventoryOne of the most noticeable differences between GAAP and IFRS is the method of determining inventory costs. Inventories are classified as

The Advantages And Disadvantages Of New Accounting Standards IFRS

968 words - 4 pages the old accounting standard, which should make comparing results on a like-for-like basis relatively straightforward. The purpose of this essay is going to give a general idea about advantages and disadvantage of IFRS, which has been widespread debate in the business community.Main bodyThe aim of the international harmonisation process of Accounting Standards is to reduce or overcome differences worldwide (Deegan 2005). In order to reach a better

"The Differences Between The Aeneas And Odysseus"

1057 words - 4 pages travail. The Trojans are simply subject to disaster, for no reason whatsoever. There are again basic similarities between the two situations; both Phaiakia and Carthage represent ideal societies to the wanderers. But again, the differences between the two societies illuminate the differences in ideology. Phaiakia is a static culture, a type of fairy tale place where everything is in perfect harmony. As long as its citizens follow custom as they

The Differences Between Prokaryotic and Eukaryotic Organisms

2171 words - 9 pages There are three main divisions of living organisms: Prokaryotes, eukaryotes and archaea. This essay will outline the division between the prokaryotic and eukaryotic organisms and explore the reasoning behind such differences with regard to general structure, storage of deoxyribonucleic acid (DNA) and its replication, metabolic processes, protein synthesis and ribonucleic acid (RNA) processing. The cell is the most basic unit of life, defined

The Differences Between Verbal and Nonverbal Communication

975 words - 4 pages Verbal communication is spoken while non-verbal communication has many forms. Nonverbal communication is different from verbal communication because verbal is voiced language, using many underlying contexts; while the nonverbal is presented using kinetics, holistic means, proxemics, as well as chronemics. It’s easy to assume that the only differences between the two are one being voiced, and the other not, but by explaining what verbal

Developmental Differences between the US and Mexico

1952 words - 8 pages Developmental Differences between the US and Mexico Neighbors following a similar political course in the mid and later twentieth century, it could have been thought that the United States and Mexico would follow similar paths from their fights to be independent, however, nothing more peculiarly different could have been the case. Due mainly to the causes and effects of essential political, religious and economic

The Key Differences between Whigs and Democrats?

1437 words - 6 pages The major parties since early 1830s in the United States of America were the Democratic Party, organized by Andrew Jackson, and the Whig Party, assembled by Henry Clay from the National Republicans and in opposition to Andrew Jackson. There were no sectional differences between the Democratic Party and the Whig Party, but there were some cultural differences. Whig party operated from the early 1830s to the mid-1850s. The Whigs approved the

The Differences and Similarities Between Plays

759 words - 4 pages The Differences and Similarities Between Plays Plays express different plots, yet authors use similar writing methods to convey a particular point. For example, one play discusses serious matters, while another play has a comedic tone. However, both plays use physical movement to represent a character’s mood. Death Knocks, Fly, and Our Town are three very different plays with different themes yet these plays use a lot of similar writing styles

differences between the terms accent and dialect

3374 words - 13 pages Explain the differences between the terms accent and dialect.Table of ContentsPageIntroduction 1What is a dialect? 1-2What is an accent? 3Two dialects 4-6West Midland dialect 4-5Liverpool dialect (Scouse) 5-6Conclusion 6-7References 8IntroductionLike all languages, English is very varied, because language in general changes over time. It comes in many different regional and social varieties. People are very used to talking about "the English

Similar Essays

The Differences Between Financial Accounting & Management Accounting

336 words - 2 pages Financial and management accounting are both important tools for a business, but serve different purposes. A business uses accounting to determine operational plans in the future, to review past performance and to check current business functions. Management and financial accounting have different audiences, as investors are not usually involved in the day-to-day operations of the business but are concerned about their investment, whereas

International Accounting 2007: Comparison Of Ifrs And Gaap

3589 words - 14 pages obligatory for all the companies that quoted on New York Stock Exchange regardless where the company is registered.IFRS versus US GAAPIt is clear that if you talk about the integration of international accounting, you have to consider the US GAAP and the IFRS. These two systems can be a basis of a worldwide-accepted standard system. The two systems are coming closer and closer with time, but there are still several differences.Final objective of IASB

Explain The Main Differences Between Common And Civil Legal Systems; Discuss The Feasibility Of The Convergence Between These Legal Systems

1463 words - 6 pages attempt to unify and integrate different legal systems. The European Union is more supreme than national law. De Groot (1992) states that it is probable that legal systems of Europe will structure one common family with analogous rules in many areas. However, there is an opinion that European legal systems are not really converging. Legrand (1996) disputes the probability of deeper convergence because of the substantial differences between

Exploring The Differences Between Liberal Democratic, Authoritarian And Totalitarian Political Systems

1742 words - 7 pages Exploring the Differences Between Liberal Democratic, Authoritarian and Totalitarian Political Systems Defining political systems is a difficult thing to do as no single system is completely static, they often change dependant on things like war and trends in regimes, such as the recent insurgence in ‘liberal democracies’ means that the classifications of systems changes over time. The British Westminster system is