...said Wayne Upton, Director of International Activities for the International Accounting Standards Board (IASB). It means that every country have their own accounting standards. There are many accounting standards in the world, with each country using a version of their own generally accepted accounting principles, also known as GAAP. Dissimilar financial reporting and accounting practices make it very difficult for users of accounting and financial reports to consolidate such information and make comparisons of firms that are listed in different countries (Prather-Kinsey, 2006). The complication arises when the firm does business in multiple countries. How can corporations be compared based upon their financials, which one are accurate, and how can investors then deal with multiple standards, which ones are accurate? The answer to these questions lies within the adoption of the International Financial Reporting Standards, or IFRS. IFRS are currently required or accepted in over 100 countries worldwide, and it looks certain that the number of countries to embrace IFRS will continue to rise over the coming years (Daske, Hail, Leuz& Verdi, 2008). It was already noticed that, IFRS issued by the IASB have been extremely doing well in terms of their acceptance and application on a worldwide basis. IFRS is the standards which is being developed and supported by the IASB. IFRS give a meaning as a set of international accounting standards that states how certain transactions and events...
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...Comparing IFRS to GAAP ACC/290 7-14-2015 Howard Pickering Comparing IFRS to GAAP As International business increases, those with financial responsibilities should be well versed in the two primary accounting methods: GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). The Financial Accounting Standards Board set the GAAP which is primary used in the United States and the IFRS is used in several other countries. If the United States where to every switch to IFRS, they would need to get a good understanding of the difference and acknowledge the similarities. This will only make for better business decisions. “The IASB and FASB are working on a project that would rework the structure of financial statements. Specifically, this project will address the issue of how to classify various items in the income statement. A main goal of this new approach is to provide information that better represents how businesses are run. In addition, this approach draws attention away from just one number—net income. It will adopt major groupings similar to those currently used by the statement of cash flows (operating, investing, and financing), so that numbers can be more readily traced across statements.” (Wiley, 2013) IFRS 2-1: In what ways does the format of a statement of financial or position under IFRS often differ from a balance sheet presented under GAAP? The GAAP requires accounts to be listed in a specific order based on liquidity...
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...EXAMINATION OF INVENTORY COSTING CONVERGENCE UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND INTERNATIONAL FINANCIAL REPORTING STANDARDS Casey Reineking Department of Accounting Murray State University Murray, KY 42071-3314 E-mail: casey.reineking@hotmail.com Don H. Chamberlain Department of Accounting Murray State University Murray, KY 42071-3314 Holly R. Rudolph Department of Accounting Murray State University Murray, KY 42071-3314 L. Murphy Smith* Department of Accounting Murray State University 351 Business Building Murray, KY 42071-3314 Tel: 270-809-4297 Email: msmith93@murraystate.edu *Corresponding author Forthcoming in Journal of International Business Research AN EXAMINATION OF INVENTORY COSTING CONVERGENCE UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND INTERNATIONAL FINANCIAL REPORTING STANDARDS ABSTRACT Accounting principles in the United States are converging toward international standards. If convergence continues, and there are proponents and detractors, then the U.S. system of accounting, called Generally Accepted Accounting Principles (GAAP), will eventually be replaced by International Financial Reporting Standards (IFRS). Convergence has profound implications for publicly traded companies and their many stakeholders such as investors, lenders, government agencies, and employees. A key issue facing accounting standard-setters is the treatment of inventory costing, an area in which GAAP and IFRS differ. This study addresses three research...
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...Part: 1 Social Relevance of Accounting Information 1.1. Accounting Standards 1.2. Need for Accounting Standards Part 2: Types of Accounting Standards Rules Based Accounting Principle Based Accounting System Part: 3 Comparisons of Principle and Rules Based Accounting Standards Conceptual Framework Flexibility of Rules and Principles International Accounting Platform Comparability of Financial Statements Realistic Representation of Accounting Information Part:4 Findings of the Research Study Part :5 Conclusion Reference Appendix Appendix 1: Narration on Figure 1 - Qualities of Accounting Information Abstract The proposed research paper attempts to illustrate the importance of a global accounting system and the impact of standards on the global market, as well as, providing the means for comparable financial reporting for decision making by both investors and corporations. This research provides understanding about the major differences of a Rules-based and Principal Based Accounting Systems, including the benefits and drawbacks of such a shift. Proponents of principles-based accounting blame the Rules-Based Accounting System for the major accounting scandals. They believe that the Rules-Based system encourages the use of financial structuring to achieve desired accounting results, which will undermine the quality of financial reporting. Supporters of rules-based accounting argue that principles-based accounting relies heavily on judgment...
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...Accounting Horizons Vol. 24, No. 3 2010 pp. 355–394 American Accounting Association DOI: 10.2308/acch.2010.24.3.355 Global Accounting Convergence and the Potential Adoption of IFRS by the U.S. (Part I): Conceptual Underpinnings and Economic Analysis Luzi Hail, Christian Leuz, and Peter Wysocki SYNOPSIS: This article is Part I of a two-part series analyzing the economic and policy factors related to the potential adoption of IFRS by the United States. In this part, we develop the conceptual framework for our analysis of potential costs and benefits from IFRS adoption in the United States. Drawing on the academic literature in accounting, finance, and economics, we assess the potential impact of IFRS adoption on the quality and comparability of U.S. reporting practices, the ensuing capital market effects, and the potential costs of switching from U.S. GAAP to IFRS. We also discuss the compatibility of IFRS with the current U.S. regulatory and legal environment, as well as the possible macroeconomic effects of IFRS adoption. Our analysis shows that the decision to adopt IFRS mainly involves a cost-benefit trade-off between ͑1͒ recurring, albeit modest, comparability benefits for investors; ͑2͒ recurring future cost savings that will largely accrue to multinational companies; and ͑3͒ one-time transition costs borne by all firms and the U.S. economy as a whole, including those from adjustments to U.S. institutions. In Part II of the series ͑see Hail et al. 2010͒, we provide an analysis...
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...33-8982; 34-58960; File No. S7-27-08] RIN 3235-AJ93 ROADMAP FOR THE POTENTIAL USE OF FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS BY U.S. ISSUERS AGENCY: Securities and Exchange Commission. ACTION: Proposed rule. SUMMARY: The Securities and Exchange Commission (“Commission”) is proposing a Roadmap for the potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board by U.S. issuers for purposes of their filings with the Commission. This Roadmap sets forth several milestones that, if achieved, could lead to the required use of IFRS by U.S. issuers in 2014 if the Commission believes it to be in the public interest and for the protection of investors. This Roadmap also includes discussion of various areas of consideration for market participants related to the eventual use of IFRS in the United States. As part of the Roadmap, the Commission is proposing amendments to various regulations, rules and forms that would permit early use of IFRS by a limited number of U.S. issuers where this would enhance the comparability of financial information to investors. Only an issuer whose industry uses IFRS as the basis of financial reporting more than any other set of standards would be eligible to elect to use IFRS, beginning with filings in 2010. DATES: Comments should be received on or before...
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...1. Introduction: Financial accountancy (or financial accounting) is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners and other stakeholders. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power. The central need for financial accounting is to reduce the various principal-agent problems, by measuring and monitoring the agents' performance and thereafter reporting the results to interested users. Financial accountancy is used to prepare accountancy data for people outside the organization or for those, who are not involved in the mundane administration of the company. Management accounting, provides accounting information to help managers make decisions to manage and enhance the business. In short, financial accounting is the process of sum-arising financial data, which is taken from an organization's accounting records and publishing it in the form of annual or quarterly reports, for the benefit of people outside the organization. Financial accountancy is governed not only by local standards but also by international accounting standard. 2. Role of Financial Accounting: • Financial accounting generates some key documents, which includes profit and loss account, patterning the method of business traded for a specific period and the balance sheet that provides a statement, showing mode...
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...contribution of IFRS to UK accounting standards Name Institutional Affiliation INTRODUCTION International Financial Reporting Standards (IFRS) are principles based on standards and the interpretations implemented by the Board of International Accounting Standards as the global financial reporting framework. IFRS are guidelines and definitions that require to be applied in the preparation of financial statements by the international companies. Before IFRS was referred to as International Accounting Standards (IAS), then in 2001 the board of the international accounting standards (IASB) took the control of setting the IAS. Then the IASB developed the standard known as IFRS. According to (Shim, Siegel, Shim & Shim, 2012), the designing of IFRS is done as a common language to be used by business affairs so that the accounts of the company are comparable and understandable across the international boundaries. They result from the rapidly growing trade and international shareholding, and they offer best solutions to the companies trading in several countries. Many different national accounting standards are progressively being replaced by the IFRS. They provide set rules to be followed by the accountants in the provision and maintenance of the accounts books which are reliable, comparable, relevant and understandable as per the users external and internal. IFRS was adopted in the UK in 2005, and all the public companies were required to use the IFRS policies for their...
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...249 [RELEASE NOS. 33-8982; 34-58960; File No. S7-27-08] RIN 3235-AJ93 ROADMAP FOR THE POTENTIAL USE OF FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS BY U.S. ISSUERS AGENCY: ACTION: Securities and Exchange Commission. Proposed rule. SUMMARY: The Securities and Exchange Commission (“Commission”) is proposing a Roadmap for the potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board by U.S. issuers for purposes of their filings with the Commission. This Roadmap sets forth several milestones that, if achieved, could lead to the required use of IFRS by U.S. issuers in 2014 if the Commission believes it to be in the public interest and for the protection of investors. This Roadmap also includes discussion of various areas of consideration for market participants related to the eventual use of IFRS in the United States. As part of the Roadmap, the Commission is proposing amendments to various regulations, rules and forms that would permit early use of IFRS by a limited number of U.S. issuers where this would enhance the comparability of financial information to investors. Only an issuer whose industry uses IFRS as the basis of financial reporting more than any other set of standards would be eligible to elect to use IFRS, beginning with filings in 2010. DATES: Comments should be received on or before February 19...
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...Effectively Communicating with Clients By J. David Strother, CFP®, AIFA®, financial advisor at DSF Wealth Management, LLC Of all the elements a CPA or financial advisor needs to consider in order to operate a successful wealth management practice, an effective client communication strategy ranks at the top of the list. Regular communication is critical to the long-term success of your firm, but it has to be done right. The fact is that the vast majority of advisors want to sell, but very few know how to effectively communicate with their clients to successfully conclude the process. In order to strengthen your relationships with current clients and continue to bring in new ones, communication needs to be a priority of your firm’s day-to-day operations. It is very difficult to execute effective communication over longer periods of time unless it's part of your business model, part of the DNA of your firm. In my experience, advisors who establish effective communication principles within their practices will see immediate results, while those who do not come off as erratic and anecdotal. Communication is not an event, it is a process that is lived day by day. Why Effective Communication is Important Communication has the potential to become the ultimate differentiator in prospecting efforts and then in client retention. In our industry, there is a lot of competition for affluent clients and the frequency and quality of your communication can make all of the difference when it...
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...Going Concern Group 4 ACCT 632, Advanced Financial Acct Theory Liberty University Aug 7, 2013 GOING CONCERN Summary of Going Concern current exposure draft Comparison and Contrast of current Going Concern theory and standards 1 Guidance provided by AU Section 341 2 Guidance provided by 17 U.S.C. §229.303 3 Proposed guidance of exposure draft Comparison and Contrast of U. S. GAAP and IFRS with respect to Going Concern 1 Current Going Concern variations between U. S. GAAP and IFRS 2 Variations between proposed changes to Going Concern issues The Benefits and Costs of a Going Concern Amendment 1 Providing preparer guidance 2 Making management responsible 3 Addressing investor concerns Provisions in light of the FASB’s Conceptual Framework 1 Understandability 2 Decision usefulness 3 Relevance 4 Comparability Response to Going Concern Exposure Draft 1 Proposed changes or corrections to the current exposure draft References Going Concern People go into business for many reasons, but no one goes into business with the expectation that they are not going to be successful. For that reason, acquisition is made for those assets that are needed to run the company with the understanding that there will be no need to arrange for early liquidation. Because there is no prediction to inform someone that their business may or may not make it, managers must rely...
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...for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers A Comparison of U.S. GAAP and IFRS A Securities and Exchange Commission Staff Paper November 16, 2011 OFFICE OF THE CHIEF ACCOUNTANT UNITED STATES SECURITIES AND EXCHANGE COMMISSION This is a paper by the Staff of the U.S. Securities and Exchange Commission. The Commission has expressed no view regarding the analysis, findings, or conclusions contained herein. TABLE OF CONTENTS I. II. Introduction..........................................................................................................................1 Methodology ........................................................................................................................2 A. Scope of the Analysis...............................................................................................2 B. MoU and Other Joint Projects..................................................................................3 C. SEC Rules and Regulations .....................................................................................8 D. General Observations and Clarifications .................................................................8 Comparison of Requirements ............................................................................................11 A. Accounting Changes and Error Corrections ..........
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...com/locate/jaccpubpol On the global acceptance of IAS/IFRS accounting standards: The logic and implications of the principles-based system q Salvador Carmona *, Marco Trombetta IE Business School, Calle Pinar, 15-1B, 28006 Madrid, Spain a r t i c l e i n f o a b s t r a c t The widespread acceptance of International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) makes it timely to examine their technical determinants as well as their implications for the accounting profession and the process of accounting harmonization. In this respect, we suggest that the principles-based approach to the standards and its inner flexibility enables the application of IAS/IFRS to countries with diverse accounting traditions and varying institutional conditions. Furthermore, the principles-based approach involves major changes in the expertise held by accountants and, hence, in their educational background, training programs, and in the organizational and business models of accounting firms. Finally, we submit that the standards set by the IAS/IFRS constitute a step forward in the process of accounting harmonization, although there is still far to go in the comparability of accounting measures across countries and regions. Ó 2008 Elsevier Inc. All rights reserved. Keywords: Globalization Accounting harmonization Convergence Principles-based standards Rules-based standards 1. Introduction The harmonization of accounting standards has made considerable progress within...
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...Accountancy Jump to: navigation, search Accountancy (profession)[1] or accounting (methodology) is the measurement, statement or provision of assurance about financial information primarily used by managers, investors, tax authorities and other decision makers to make resource allocation decisions within companies, organizations, and public agencies. The terms derive from the use of financial accounts. Accounting is the discipline of measuring, communicating and interpreting financial activity. Accounting is also widely referred to as the "language of business".[2] Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarised, interpreted, and communicated; for public companies, this information is generally publicly-accessible. By contrast management accounting information is used within an organisation and is usually confidential and accessible only to a small group, mostly decision-makers. Tax Accounting is the accounting needed to comply with jurisdictional tax regulations. Practitioners of accountancy are known as accountants. There are many professional bodies for accountants throughout the world. Many allow their members to use titles indicating their membership or qualification level. Examples are Chartered Certified Accountant (ACCA or FCCA), Chartered Accountant (FCA, CA or ACA), Management Accountant (ACMA, FCMA or AICWA), Certified Public Accountant...
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...The IMPLeMeNTATION OF IFRS IN The UK DeVOLVeD ADMINISTRATIONS Ciaran Connolly Tony Wall The IMPLeMeNTATION OF IFRS IN The UK DeVOLVeD ADMINISTRATIONS by Ciaran Connolly Tony Wall Published by CA house 21 haymarket Yards edinburgh eh12 5Bh First published 2013 © 2013 ISBN 978-1-904574-94-1 eAN 9781904574941 This report is published for the Research Committee of The Institute of Chartered Accountants of Scotland. The views expressed in this report are those of the authors and do not necessarily represent the views of the Council of the Institute or the Research Committee. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the authors or publisher. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopy, recording or otherwise, without prior permission of the publisher. Printed and bound in Great Britain by Garnett Dickinson CONTeNTS Foreword .................................................................................................................... Acknowledgements .................................................................................................... Abbreviations .............................................................................................................. executive summary ...................
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