GAAP or IFRS

WHEN WILL WE CONVERT?

Paris Williams

10/1/2013

The accounting profession is on the verge of one of the most significant changes since the 1930s. In the very near future there is a great possibility that the United States Generally Accepted Accounting Principles (GAAP), as it is known today, will be replaced by the global standards known as the International Financial Reporting Standards. This paper will provide a history of IFRS and discuss the time frame of the conversion, along with is effects on U.S in the accounting perspective.

Over the past few years, much talk of U.S adopting the IFRS as the basis for accounting principles has circulated amongst the accounting and business world. Although many may resent the conversion from U.S Generally Accepted Accounting Principles (GAAP) to the London-based International Financial Reporting Standards (IFRS), the movement has already began. Plans for this movement have already been proposed and put into effect, project and trials are being observed, and results are soon to come as the SEC and others make their final decision. However, with such a complex transition one must propose many questions such as, how will the movement affect us? What are some of the advantages and disadvantages? How do we adjust, and what is the ultimate benefit and purpose of converting?
GAAP and IFRS are two separate sets of accounting standards used in different countries of the world. Although they both have the same goal- to ensure that financial reports are transparent, informative and useful to present to potential investors and creditors- they use different approaches to achieve this goal. GAAP was created by the Financial Accounting Standards Board (FASB) in 1973. It was created to work in accordance with the AICPA (American Institute of Certified Public Accountants) Code of Professional Conduct,