Running head: US GAAP vs IFRS 1
US GAAP vs IFRS 12
US GAAP vs IFRS
For the business world, especially those in the accounting field, a major issue has risen in recent years relating to the differences between the United States Generally Accepted Accounting Principles (US GAAP) and the International Financial Reporting Standards (IFRS). Currently, the majority of countries in the world (more than 100 countries) follow IFRS guidelines; however, the United States still uses GAAP. This topic has become a main topic of discussion as there is a plan for convergence between the two frameworks in the near future. The United States accounting system will undergo drastic changes when this occurs, but the end result is intended to simplify the accounting procedures around the world. "Through these projects, some covering major components of the financial statements, the boards intend to improve financial reporting information for investors while also aligning the US and international accounting standards.
These projects are a significant move toward achieving a common accounting framework, a necessary step in the globalization of business and investment" ("US GAAP vs. IFRS: The basics", 2010). The main difference between US GAAP and IFRS is that US GAAP is considerably rule-based, where IFRS is more principal-based which means IFRS has room for interpretation. There are too many specific differences to cover in a short presentation, however, an explanation of a select few major differences are discussed herein. A discussion of some of the advantages and disadvantages for the worldwide convergence of accounting standards are included, as well.
Keywords: US GAAP, IFRS, Convergence Project, FASB, IASC
US GAAP vs IFRS
In our current global economy, financial reporting requires operators to understand the accounting practices used by the company, the language of the country in which the company exists, the...