...the differences between Generally Accepted Accounting Principals (GAAP) and the International Financial Reporting Standards (IFRS). Currently, the majority of countries in the world follow International Financial Reporting Standards guidelines; however, the United States still uses Generally Accepted Accounting Principals. This topic has been a main focus because 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 in the long-run the idea is to simplify the accounting procedures around the world. The main difference between GAAP and IFRS is that GAAP is considerably rule-based, whereas IFRS is more principal-based which means IFRS has room for interpretation. The specific differences are far too many to cover in a short presentation, however, an explanation of some major differences are mentioned below. In certain instances, GAAP and IFRS follow different approaches for the determination of specific amounts as well as how these amounts are recognized in financial statements and within the notes. One of these instances occurs in the measurement of inventory. Unlike GAAP which accepts the FIFO, LIFO, and weighted-average methods, IFRS does not accept LIFO. Also, when inventory is recorded on the balance sheet, IFRS requires that it be reported at the lower of historical cost or Net Realizable Value. GAAP, on the other hand, requires inventory to be reported at the lower...
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...of IFRS and GAAP on Auditors Acc 576 Auditing and Business Concepts Abstract The convergence of IFRS and GAAP continues to present professional challenges for U.S. auditors, it also presents career opportunities for auditors who encompasses the idea of globalized change. The convergence of accounting standards is changing the attitudes of CPAs and CFOs as far as internal accounting is concerned and how the quality of the International Accounting Standards will affect it and the efforts made toward converging IFRS and the GAAP standards. Create an argument for or against the IFRS and GAAP convergence process versus a pure adoption of IFRS in the context of impact to the public accounting profession. With Business and finance globalization, almost a hundred countries have adopted IFRS. Approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies, although approximately 90 countries have fully conformed with IFRS as announced by the IASB and include a statement acknowledging such conformity in audit reports. Motivations for convergence include the belief that it will result in increased comparability between financial statements, which will benefit a variety of stakeholders. One would need to weigh the benefits of a one time cost for transitioning fee, the ability to compare reports, and the benefit of using a single reporting standard for businesses. Assess the cost impact for or against IFRS and GAAP convergence...
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...A major difference between GAAP and IFRS is that GAAP is rule-based, whereas IFRS is principle-based. With a principle based framework there is the potential for different interpretations of similar transactions, which could lead to extensive disclosures in the financial statements. Although, the standards setting board in a principle based system can clarify areas that are unclear. This could lead to fewer exceptions than a rules-based system. Another difference between IFRS and GAAP is the methodology used to assess an accounting treatment. The difference in research and development costs is that under IFRS costs are capitalized and under the US GAAP costs are expensed. The industries that would be most impacted are industries such as medical and technological industries that deal worldwide and have a significant portion of their clients following accounting standards of IFRs. These companies will likely have mixed feelings about the shift. Under the current US GAAP with R&D costs being expensed, US GAAP allows for a higher net income which ends up benefiting the executives as a result of cost being expensed. On the other hand, for investors and auditors purposes it will become more challenging to follow a whole new system after having learned the US GAAP. The potential downfalls are that the united states, even though merging with IFRS who has a better track record for better accounting quality, are that the united states will become slow to understanding...
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...77–92 American Accounting Association DOI: 10.2308/iace-50298 Going Concern Designations and GAAP versus Non-GAAP Earnings Metrics James L. Bierstaker, Thomas F. Monahan, and Michael F. Peters ABSTRACT: Many students have not spent much time studying or contemplating the importance of non-GAAP (Generally Accepted Accounting Principles) earnings to the ‘‘Street.’’ Based on the facts of an actual company and utilizing the financial information drawn from this company’s 10-K and Earnings Release, this case introduces students to the strengths and weaknesses of GAAP and non-GAAP earnings measures, and why the Street might be more interested in cash and recurring earnings in attempting to predict movements in stock price. It also provides the instructor with an opportunity to discuss the dangers of allowing firms to emphasize earnings in their press releases that are not defined by an external authoritative body (such as the Financial Accounting Standards Board [FASB]), and how this can hurt the consistency and reliability of reporting. This is an important discussion, since regulators have recently formally proposed to include non-GAAP measures in their overhaul of the auditor reporting model (Public Company Accounting Oversight Board [PCAOB] 2011). The case also familiarizes students with current auditing guidelines dealing with the going concern decision and the potential role that non-GAAP earnings can play in this decision. Thus, the three primary learning objectives are to teach...
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...Financial management is very essential for health care organization’s to succeed and accomplish goals. As a financial management has a major aspect on how it incorporates the ethical standards and proper reporting practices. To report practices and ethical standards in health care finance assist financial managers in conducting. They conduct effect analysis of the organization’s revenues, expenses, assets, and much more. In the next few paragraphs in the paper will be discussed is the four elements of financial management, the accepted accounting principles, and a few general financial, ethical standards will conduct. Plus, there would be examples of conduct and financial reporting practices in the health care organizations from other articles that will be discussed. The four elements of financial management are planning, controlling, organizing and directing, and decision making. The first element, planning is to set up the health care organization goals and objectives. Then to see what steps have to take and which steps would be more effective to achieve the goal. The second element is controlling; as a financial management will need to consist of verifying whether the department is following the plans, instructions issued, and the principles established. The third element is organizing and directing; which this can be a process that follows planning and controlling element in the health care organizations. While organizing established how resources can be effective...
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... HCS/405 30 June, 2014 Reporting Practices and Ethics The accounting staff is a very large part of the healthcare industry. Accounting staff code and bill products and different services that are offered at that location and maintaining an ethical culture is imperative. There are accounting principles and standards and procedures that are part of the General Accepted Accounting Principles (GAAP). The GAAP principles have four key elements: Planning, Controlling, Organizing and Directing and Decision Making. Ethical Components and GAAP Accounting is the backbone of any medical organization because of it enormous impact on running as a cost effective organization. Every organization runs on its own set of principles and goals, but most are certainly guided by different federal, state, and government laws. There are accounting principles and standards and procedures that are part of the General Accepted Accounting Principles (GAAP). The GAAP principles have four key elements: Planning, Controlling, Organizing and Directing and Decision Making. The GAAP principle of Planning includes ways of setting goals and guidelines for the future of the organization. The principle of Controlling involves ensuring that planned goals are on track with previous goals and also that there is room to fix any issues that may arise. Organization and directing is to make sure that the organizations full potential is being provided and focuses on management on a day-to-day basis...
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...rules that Excello must follow to comply with if it is to fall in line with accounting actions, especially when it comes to posting dealing as well as financial statements. Some of the regulations include the SOX act of 2002, the GAAP as well as the AICPA Code of Conduct. Excello’s accounting team must take into account the laws and regulations to make the best decision that will be legal, ethical and honest for the organization as well as its clients and vendors. The Sarbanes-Oxley (SOX) act of 2002 was created in reaction to the accounting scams of WorldCom and Enron. The act is a body of provisions that provide guidelines on the responsibilities of the higher management as well as penalties for unethical activities. The CFO of Excello, Terry Reed, wanted to post the sale of $1.2 million of equipment before the end of 2010. This type of transaction would typically be recorded as a sale on the date of shipment; however, Data Equipment Systems did not have the room to keep the stock. If Reed records the $1.2 million sale in 2010 instead of 2011, he deceives the internal and external users of the financial reports by artificially inflating the end of year reports for 2010. This is an ethical breach as well as an impropriety against GAAP standards. If Excello inflates earned...
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...Running Head: Accounting Principles and Ethics Article Accounting Principles and Ethics Articles Myrthe SaintLouis HCS/457 November 30, 2009 Victoria Odom Abstract A healthcare organization is one of the most successful business inside of a healthcare organization theres so many different profession within, from healthcare providers such as physician, nurses ,Medical assistants and so many more. .A healthcare organization also provide care, , consistency, and support.In addition to care being providing in health care Financial management is another important assets in healthcare organization. With todays econmy crisis healthcare organization face many financial issues for example, Decreasing revenues, increasing costs and terminating healthcare workers .Being a Mananager,Administrator in a healthcare organization is not a easy job because they have to ready lead in today’s climate and also position their organizations for later financial issues and potential political changes. . In order to have an effective financial management, organization, many health care organizations use the Generally Accepted Accounting Principles, corporate compliance, and the value of ethics. Accounting Principles and Ethics Articles A healthcare organization is one of the most successful business inside of a healthcare organization theres so many different profession within, from healthcare providers such as physician, nurses ,Medical assistants and...
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...on the date of shipment. However, the customer requested that Excello hold on to the product until January 11, 2011, because Data Equipment lacked the warehouse capacity to hold the product until then. The firm must adhere to all the laws and other regulations as set. Among the regulations include Generally Accepted Accounting Principles (GAAP), Sarbanes-Oxley Act of 2002 (SOX), and AICPA code of conduct. The rules impact the mechanism, of financial reporting in the company and also help sin the actions of major principles of accounting. As a result of this, the accounting team must ensure they get the best method that will help in maximizing g the wealth of the shareholders. Albeit the earnings estimates could be gotten through the adoption of illegal treatment of accounting books, it would not be of more help to the firm as it would be more disastrous when the Wall Street detected it. There are a number of rules that Excello must follow to comply with if it is to fall in line with accounting actions, especially when it comes to posting dealing as well as financial statements. Some of the regulations include the SOX act of 2002, the GAAP as well as the AICPA Code of Conduct. Excello’s...
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...TO: CEO FROM: Student XXX DATE: October 22, 2012 SUBJECT: Professional responsibilities of a CPA and the difference between a review and an audit. Difference between a review and an audit. An audit expresses an opinion on the financial statements. Its primary goal is to see if the financial statements contain material misstatements. In an audit, the auditor would sample and test transactions, confirm receivables and more to check internal controls and accounting procedures. A review only expresses a limited assurance that the financials have been put together properly. The primary goal of a review attestation engagement is to express limited assurance that no material changes should be made to the financial statement in order for them to be in conformity with general accepted accounting principles. During the course of a review, the auditor would perform limited procedures and inquiries, less than a formal audit. An example is performing analytical procedures on the financial statements. The reviewer would compute the traditional ratios for liquidity, solvency, turnover, and profitability to see if they have changed from the prior year or expected relationships. If they have, the reviewing auditor would ask about why and see if the explanation made sense given the rest of the data available and their understanding of the activity during the period. Professional responsibilities as a CPA I am responsible to exercise professional judgment to determine allocations, valuations...
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...objectives although some are made on generally accepted accounting principles). So the question I would ask is this “How good is the financial management of our health care organizations and do they hold a good financial reporting records”? GAAP The generally accepted accounting principles (GAAP) are considered as the framework of guidelines for the financial accounting and jurisdiction of all accounting standards. With these accounting standards the GAAP includes such things like standards, conventions and the rules the organization accountant follows when during a copy and summarizing all the transactions when doing the work on preparing the financial statements. All third parties that are involved with the reports must then rely on the information to be free from all bias and inconsistency without debate or not so GAAP standards are followed. All business states that, “generally accepted accounting principles are guidelines precisely, are a group objectives and conventions that have been set up permanently over time to set how financial statements are prepared and presented (FASAB, 2010). All organizations that do the dealing with any type of financial data must act in accordance with GAAP standards so that outside creditors can view their financial statements with any difficulty. Corporate Ethics In all groups composed there is a corporate...
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...Data Equipment, the sale will have to occur in January 2011 when the buyer will have adequate space to hold the equipment purchased. Terry wants to make the revenue at all costs and will do whatever it takes to make it happen. That type of motivation can create questionable decision making that can potentially violate laws and the AICPA Code of Conduct. Excello Legal Issues The failure to meet earnings estimates are of significant concern for the organization where it will prompt questionable decisions by executives. Excello Telecommunications must adhere to accounting practices and regulations in the organization’s activities to ensure financial reporting is accurate. The SOX Act of 2002, Generally Acceptable Accounting Principles (GAAP), and the AICPA Code of Professional Conduct are some guidelines that the company must follow. However, the pressures of meeting financial goals can tempt employees to practice earnings management. Earnings management can effect financial reporting when used extensively to make the company look like...
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...Changes and Error Footnote Analysis According to Nike’s most recent 10K for fiscal year-ending (FYE) 2009, Note 1 addresses key accounting principles and states there have been no recent changes in valuation methods foreitherinventory or depreciation. Nike does however mention that there were necessary steps taken to streamline management. Also, GAAP requires Nike to make numerous estimates that may have actual amounts that differ. According to Note 16, restructuring charges of $195 millionwere incurred to streamline management on Nike’s behalf. Additional costs are not expected to be incurred in future periods. Because this is an indirect cost of a change in accounting, the restructuring charge isincluded in corporate expense and pre-tax retained earningsin 2009 only, which is required under GAAP.Also, because this change was made by choice, the notes explain why, where, and when the change was made as well as the qualitative effects recorded. This meets all disclosure requirements by GAAP. According to Note 4, Nike made revisions to preliminary estimates, including valuations of tangible and intangible assets. Nike meets GAAP disclosure requirements by presenting the effect on income and per-share amounts. Nike goes on to mention in Note 15 thatcurrently there are nocommitments, contingencies, or legal proceedings to be estimated that they believe could have a material impact on future financial statements or operations. This disclosure is not required but could be...
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...sold on December 20, 2010 for $1.2 million; however, the receiver of the product is not able to take control of this product until January 11, 2011. Terry Reed needs to find a way to record the transaction before December 31, 2010 in order to meet their obligations. The accounting principle for reporting on the financial statements is the product must be posted in the quarter the product leaves the warehouse. (Mintz, S., Morris, R.E, 2011). In the accounting world, there are several different agencies, which regulate the reporting of financial statements. These rules and regulations protect the stakeholders and public from any wrong, fraudulent reporting and unethical behavior. The main agencies are (SOX), Sarbanes and Oxley Act of 2002, (GAAP), Generally Accepted Accounting Principles and the AICPA Code of Professional Conduct. In order for Terry Reed, and his accounting team to come up with a viable solution to their reporting dilemma, they must follow the rules and regulations of these agencies to make a sound decision which is legal and ethical for their clients. There is a great potential...
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