...ACCT525 Week 2 Assignment Read “New IASB Leader Embraces Challenges” which can be accessed through the DeVry online library. Choose a country that has already adopted IFRS. In 2-3 pages (12-pt type, double-spaced) answer the following questions: 1. Describe the process that your selected country went through to adopt IFRS, such as how long it took for the country to fully adopt IFRS. IFRS’s are a single set of accounting standards at a global level for all sectors. Accounting standards are trustworthy statements is the reflection of financial statements to be presented to the stakeholders . United kingdom has already adopted IFRS since 2005.I would be discussing on adoption of IFRS by United kingdom for this paper. The United Kingdom has already adopted IFRS for the consolidated financial statements of all companies whose securities trade in a regulated market” (EU Law).The IAS Regulation requires companies with securities either equity or debt acknowledged to trading on a regulated market of any member state of the European Union to use international accounting standards in preparing their consolidated financial statements. As a member state of the European Union, the United Kingdom is subject to IAS Regulation adopted by the European Union in 2002. The EU IAS Regulation requires application of IFRS adopted by the EU for the consolidated financial statements of European companies whose securities trade in a regulated securities market starting in 2005. In the United...
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...THE FUTURE OF THE IFRS IN THE USA. IS THERE ONE? by MIRANDA FORBES Chartered Accountant, KPMG To : ICAEW Date : 11 November, 2013 INTRODUCTION International Financial Reporting Standards are designed as a common global language for business affairs so that company accounts and reports are recognizable and proportionable across international borderlines. They are notably influential for companies that have proceedings in numerous countries. They are increasingly substituting the many different national accounting standards with the goal that these standards will some day be globally accepted. Such adoption is expected that will be beneficial to investors and other users of financial statements by reducing the costs of comparing alternative investments and increasing the quality of information. Companies that have high levels of international activities are among the group that would benefit from a switch to IFRS. Companies that are involved in foreign activities and investing , benefit from the switch due to the increased comparability of a set accounting standard. Benefits and drawbacks of having one set of global standards are being debated in the monograph by ICAEW as well as what else can be done in the future. A concern that is enclosing the financial world for a while now is being taken up in this report, and coming my investigation and self-reliant study I am going to give my opinion and answer the following question:...
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...memorandum is to view that the US GAAP should adopt IFRS. I will provide benefits and costs of the SEC's adoption of IFRS which I think will be a beneficial situation to corporations, investors and auditors. Although the SEC continue to support IFRS, it currently does not allow U.S public entities to use IFRS on our major stock exchange. The SEC has been reluctant to adopt IFRS standards for decades. The IFRS has been working with all countries to harmonize their standards. The goal is to use a single set of enforceable global accounting standards that will unify the reporting of corporations worldwide. The IFRS standards are principle based and simplified. This makes it easier to follow than that of US GAAP; therefore, IFRS is the more convenient choice and should be adopted. By adopting IFRS Corporations will be able to trade goods and services worldwide without local governmental pressure and rules. This will minimize transaction costs to US companies, which leads to lower prices, an increase in competition and highly satisfied customers. Businesses will be able to present financial statements on the same basis as their foreign competitors, which will increase comparability between the company’s financial positions. Another benefit for US Corporation doing business as many entities multinational is that it limits the reporting to IFRS, which will increase consistency and transparency in its reporting. By using IFRS to replace GAAP and IFRS, combined, however, people argue...
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...IFRS vs. GAAP: Same or Different ACC407 January 27, 2013 Catherine McBride IFRS vs. GAAP: Same or Different The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are working on nearly a dozen joint projects designed to improve both U.S. Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), and ultimately make the standards fully compatible. But in the mean time, the two predominant accounting standards to this day are the U.S. GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). These two standards have several differences because they both take a completely different approach to their methodology. The U.S. GAAP is more rule-based, where IFRS is principal-based. With IFRS's principal-based approach, a lot of room was left open for interpretations for similar transactions. It gives room for second guessing, debate and conjecture. Anytime you have a fundamental system that can be debated you create a forum of uncertainty that then requires an arbitrator who can settle the dispute. This arbitrator is called the standards setting board, and it provides fewer exceptions than a rule based system (Parrott, 2008). With the U.S. GAAP you have a rule-based system. This is a more clear approach that distinguishes between what seems correct and what is correct. There is no room for interpretation. Each process has a set...
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...BUS5613 | Will the U.S. Adopt IFRS? | U.S. Integration of IFRS | | Christopher Anglin | 5/3/2015 | | Will the U.S. Officially Adopt IFRS? Initially, as a student relatively new to the study of international accounting standards and regulations, I assumed that the United States would be leading the efforts of an internationally accepted accounting standard, and I was both correct and incorrect in that assumption. The fact that the U.S. has the economic influence that it has, and its ties around the world, my assumption that other countries would follow suite, in hind sight, was naive. Days into my research, after being flooded with circumstantial evidence and factual evidence and information both supporting and denouncing the United States influence on this topic, I came up with one conclusion and one conclusion only, the U.S. will adopt IFRS or a future IFRS-like standard that is fully recognized by the international community, and it will not be U.S. GAAP. I am not stating that U.S. GAAP will no longer exist; I am saying that IFRS will be accepted as an equal to the U.S. GAAP and in the future, U.S. domestic reports will reflect and be tailored to IFRS requirements ultimately taking precedents over domestic accounting principles in an effort to save time and money. As we have all learned over the years, large scale changes in the United States take time and they are often slowly integrated over the years to not upset the delicate balance of domestic politics...
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...Are IFRS-based and US GAAP-based Accounting Amounts Comparable? Mary E. Barth* Stanford University Wayne R. Landsman, Mark Lang University of North Carolina Christopher Williams University of Michigan August 2011 * Corresponding author: Graduate School of Business, Stanford University, 94305-5015, mbarth@stanford.edu. We appreciate funding from the Center for Finance and Accounting Research, Kenan-Flagler Business School and the Center for Global Business and the Economy, Stanford Graduate School of Business. We appreciate comments from Elicia Cowins, Julie Erhardt, Margot Howard, Elmar Venter, an anonymous reviewer, and workshop participants at the University of Cologne, ESSEC Business School, George Washington University, Giessen Business School, University of Graz, IESE Business School, University of Leeds, University of Missouri, Oklahoma State University, Shanghai University of Finance and Economics, Singapore Management University, Southern Methodist University, Stanford University, Washington University at St. Louis, and the European Accounting Association Congress. We also thank Dan Amiram and Mark Maffett for assistance with data collection. Electronic copy available at: http://ssrn.com/abstract=1585404 Are IFRS-based and US GAAP-based Accounting Amounts Comparable? Abstract This study documents whether application of IFRS by non-US firms results in accounting amounts comparable to those resulting from application of US GAAP by US firms. IFRS firms have...
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...benefits of the conversion to IFRS far outweigh the costs and therefore the US should adopt IFRS. Transitioning to IFRS will allow the US to regain strength in the global investment market as financial statements will have greater comparability and this will benefit the economy as a whole. To the investor, IFRS promise more accurate, comprehensive and timely financial statement information and its global comparability. IFRS allows small investors to compete better with professional investors. IFRS eliminate many international differences in accounting standards so that it reduces the cost and the risk to investors of processing financial information. The domestic investors should keep updating the differences between GAAP and IFRS to using IFRS numbers to make the best decision. To the U.S public companies, IFRS can enhance the liquidity of capital markets and reduce companies’ costs of capital. IFRS will have a substantial impact on the reporting quality of U.S. companies. U.S firms with operations around the world could potentially save a lot of money by avoiding the costs of translating their financial reports into several local accounting languages. On the costs side, adopting IFRS would require various upfront costs for companies. During a transition phase, companies would have to modify their accounting systems and processes as well as provide comparative financial information between their previous U.S. GAAP reports and their new IFRS-compliant reports. In addition...
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...difficult for investors and creditors to compare the financial statements of companies in different countries. Therefore, a standardised accounting standard should be introduced and follow by the companies all around the world in recording their financial statements in order to facilitate the investors in doing their business. International Financial Reporting Standards (IFRS) and US generally accepted accounting principles (GAAP) are two main accounting principles that is widely used in the majority of the companies. However, there will be still conflict in the interpreting and understanding each other financial statements due to these two different approaches. Therefore, to overcome this problem, International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) are working on it by taking the necessary steps as time passes to close down the gap and standardised the accounting principles globally making it easier for all parties. (157 words) 1.0 Introduction In the world of globalization, a number of countries had been experiencing the convergence of their local GAAP and IFRS in order to apply the international accounting standard to suit the growing business world. This does not left out the people of the United States who are also trying to converge the accounting standards of US GAAP and IFRS in order to close down the gap between the accounting standards. FASB and IASB are the main international bodies assisting the Securities and Exchange Commission...
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...accounting practices in various countries to be exactly the same. Harmonisation tends to be associated with IASB which carries out the process of coordination whereas standardisation is the process of uniformity that can be seen in the European Union (EU) where transnational legislation occurs. According to various accounting scholars, they said it is important to distinguish between harmonisation of accounting practices (de facto) and harmonisation of accounting regulations (de jure). De facto is often associates with harmonisation while de jure is associated with standardisation. Reasons for Harmonisation RELIABILITY OF FINANCIAL STATEMENTS FOR THE USERS One of the reasons that international harmonisation of accounting standards should be carried out is to ensure comparability, reliability and quality of financial reports and disclosure of foreign enterprises. This allows investors and financial analysts to understand the financial statements of foreign companies whose share they may wish to buy. The investors and financial analysts want to be clear about the nature and magnitude of the differences. If the accounting practices in different countries are very diverse, they are not sure whether to rely on the statements or not since they only understand their national accounting standards. Therefore,...
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...IFRS in the United States: If, When and How Donna L. Street s described by Erchinger (2012), for decades various United States (US) Securities and Exchange Commission (SEC) Chairs and Chief Accountants have expressed support for the development of one set of globally accepted accounting standards. Since the formation of the International Accounting Standards Board (IASB) in 2001, SEC leaders have repeatedly indicated that the logical choice for globally accepted standards is the International Financial Reporting Standards (IFRS) issued by the IASB. However, in line with other large economies, such as Japan, India and China, as of June 2012 the US had not adopted IFRS.1 This paper explores when and how, and indeed if, IFRS will become the basis for the financial reporting of domestic SEC registrants in the US. Readers are encouraged to first review Erchinger’s (2012) history of the SEC’s consideration of IFRS in the US included in this forum and especially Table 1 of this article, which provides a chronology of SEC releases regarding incorporation of IFRS into the US financial reporting model. This paper complements Erchinger’s by assessing approaches recently explored by the SEC for incorporating IFRS into the US financial reporting model. A decision can lead to correct or incorrect action. However, as articulated by many SEC constituents, uncertainty associated with repeated delays and hence ‘no decision’ by the SEC is clearly not in the best interest of investors and other financial...
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...IFRS Versus GAAP TEAM A Anna Brandon ACC/290 Octuber 8th, 2014 Pat Maccon IFRS Versus GAAP If aiming to invest in emergent markets or to get involved in any kind of business, it is relevant to acknowledge the world’s two main accounting systems: Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). GAAP standards provide direction for almost every accounting setting, including inventory accounting methods and procedures. GAAP is used principally in the United States, although the Security and Exchange Commission (SEC) is looking to switch to IFRS by 2015, the system used in the European Union and many other countries. Many countries have their own accounting systems, although most conform to one main system or the other as they work to keep their markets modern. In fact, the SEC must consider some challenging points before deciding whether the United States should adopt IFRS. For example, companies must ensure that their accounting departments and outside auditors are properly prepared for conversion to IFRS. Conversion may require software upgrades or other adjustments to ensure that data necessary for IFRS reporting are properly being gathered. In addition, because U.S. GAAP and IFRS standards may differ, management will have to re-evaluate the efficiency of internal controls in expectancy of IFRS conversion. Controls must be modified or added. Management will also need to ensure that the issuer's independent auditor...
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...IFRS and GAAP Shannon Strickland ACC 290 November 10, 2014 Annette Anigwe IFRS and GAAP Accounting around the world could be considered the same but different. The United States generally falls under GAAP (Generally Accepted Accounting Practices) most other countries use the IFRS (International Financial Reporting Standards). While at their basic fundamentals both are still accounting, there are differences that must be adhered to in order for the accounting practices to work as they should. In what ways does the format of a statement of financial or position under IFRS often differ from a balance sheet presented under GAAP? IFRS does not mandate a specific order or classification of accounts on the statement of financial position. In most cases, companies report assets in reverse order of liquidity. GAAP specifically requires that all accounts be ordered based on degree of liquidity. Cash is usually reported first and non-current assets will be last. Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial reporting? Explain. No. Both maintain similar viewpoints. Both agree that financial reporting data should be relevant and faithfully represented. Information that is relevant and faithfully reported is useful to investors, creditors, and regulators regardless of which practice is used. What terms commonly used under IFRS are synonymous with common stock and balance sheet? The balance sheet is the same as the Statement...
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...organization is reporting under the IFRS standard while their branch in the United States is using US-GAAP. While the differences do not outweigh the similarities, GAAP and IFRS standards have caused some concerns in financial reporting. These concerns have led to the evaluation of these two reporting standards and the discussion on whether to move IFRS worldwide. This paper will outline a few of the differences between GAAP and IFRS as well as review the discussion of standardized reporting using IFRS. Introduction Historically, accounting and reporting standards in the United States have been set by the AICPA (American Institute of Certified Public Accounts) as laid out by the regulations set by the Securities and Exchange Commission (SEC). In 1973, the Financial Accounting Standards Board (FASB) was developed by the AICPA as a council for establishing standards for reporting for all United States companies. Under FASB, GAAP was reorganized into approximately 90 accounting standards offering concise methods to follow for financial reporting. This not only allowed for ease of access when reading US financials statements, but also allowed for comparison of documentation for investments, credits, and other financial decisions. On the other hand, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) based in London. Currently, about 120 nations require the use of IFRS for financial reporting by public companies...
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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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...IFRS and GAAP Valeria Torres Acc/290 05/02/16 Comfort Chevannes What are the main diffrences between IFRS and GAAP International Accounting Financial Reporting Standards AKA IFRS and Generally Accepted Accounting Principles AKA GAAP are two financial reported systems that govern and principles to the accounting world. Both systems require specific financial documents and have specific standards to follow in terms of accounting for inventory and how they define assets. What will be further discussed will be key diffrences in the two financial accounting reporting systems. 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? IFRS and GAAP’s difference in the format of financial position on the balance sheet is the order in which liquidity is reported. In the balance sheet under GAAP the degree of liquidity is taken highly into consideration, meaning that cash under currents assets is the first to be recorded followed by longterm asstes, liabilities and then share and stock holders equity. IFRS on the other hand doesn’t require any type of recording order. So it can start with Liabilities, and work its way down the line to current assets, cash. IFRS 2-2: Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial reporting? Explain IFRS and GAAP’s conceptual framework do not differ in terms of the objective in financial...
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