Accounting refers to the systematic way of summarizing, analyzing and reporting the financial transactions. Accounting helps in clearly understanding the financial position of the organization and comparing it with other organizations within a particular financial period…
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The general purpose of the financial statement is to be prepared in accordance with the international accounting standards. The need of the accounting standards emerges because auditors and financial analyst are generally confronted with problems of accounting like biasedness, misinterpretation, inaccuracy and ambiguity. To minimize these kinds of errors a set of accounting standards was developed which was universally accepted and recognized. Without these accounting standards each and every business entity had to develop their own business standards which would make it impossible to compare the financial information with other business organizations. International Financial Reporting Standards (IFRS) are accounting principles and standards formulated by the International Accounting Standard Board (IASB) which is situated in London. These established accounting standards are ideally applicable equally to all the organizations worldwide. During 1973- 2000, the international accounting standards were formulated by the predecessor organization of the IASB formerly known as International Accounting Committee (IAC) (Beke, 2011). Since April 2001, the accounting standards set by IASB are taken into consideration. ...
A financial report of high and genuine quality improves their understanding and makes them better informed and also reduces their risk of trading (Beke, 2011) 3) IFRS helps in eliminating most of the financial adjustments that the financial analyst have made historically in order to make the company financial statements comparable internationally (Beke, 2011) 4) IFRS provides reduced information costs and information risk to potential investors (Beke, 2011). Before March, 2008 the US listed foreign issuers of securities were required to prepare financial statements with respect to the US Generally Accepted Accounting Principles (US GAAP) or include reconciliation to US GAAP as a part of the financial statement reporting (Liu, 2011). This step became a prerequisite in the United States of America (USA) because of lack of widely accepted high quality accounting standards. Most of the foreign institutional investors file their annual reports on form 20-F which incorporates reconciliation. This reconciliation is often viewed as an unnecessary and expensive step by the foreign issuers of security (Liu, 2011). The European Union, New York Stock Exchange and the American Stock Exchange have allowed the Securities Exchange Commission of USA to allow foreign companies to use the IFRS to list on the US stock markets without the reconciliation or compliance with the US GAAP accounting principles. This was done as IFRS is considered a high quality accounting standards although there are some significant differences between the IFRS and US GAAP accounting standards. However, the investors need to be informed the differences between the IFRS and US GAAP accounting standards for
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(Account Standardization, IFRS and US GAAP Essay)
“Account Standardization, IFRS and US GAAP Essay”, n.d. https://studentshare.org/finance-accounting/1477680-ypwe-firmly-believe-that-improvements-in.
The research demonstrates that the manner in which the FASB, IASB and the SEC have been working towards achieving convergence between the US GAAP and IFRS is indeed questionable. Despite several delays, there appears to be commitment between both sides to achieve a universal accounting framework at the earliest.
The financial reports contain several key projects to be addressed by both IASB and FASB such that the financial disclosures require further enhancement as well as alignment with the existing standards issued by IASB and FASB. Currently, the key projects which are required to be considered further, are revenue recognition, leasing and financial instruments.
The main objective of financial reporting is to communicate to investors, creditors, and other interested parties the financial outcomes of a business in a understandable and useful way. The basic responsibility for reporting those financial outcomes rests with the business’s management.
In addition, organizations with subsidiaries in areas that permit or need IFRS may have the capacity to utilize a single accounting language in the company. Also, companies may need to convert from GAAP to IFRS if they are a subsidiary of an international organization that should employ IFRS, or if they have an external financier that must utilize IFRS.
The information is of importance to management, investors, creditors, employees and other government organizations. Financial statements are written reports describing quantitatively the financial health of a company. An income summary shows the income and expenditure of a firm or a balance sheet shows the assets and liabilities and equity of a company are all examples of financial statements.
tates companies abide by the Generally Accepted Accounting Principles, while in Europe companies abide by the International Financial Reporting Standards. The utilisation of each of these frameworks affects the information contained within them. This proposal studies the effect
to collate information regarding these transactions in a manner that allows for investors and other stakeholders to understand the true business dynamics of the entity, and their positioning in the market in terms of various metrics utilised by accountants and analysts as
The current status of SEC acceptance of IFRS statements for the US based companies is described below.
SEC seems shifting from US GAAP to IFRS statements for the US based companies because of the differences between these two
Due to Mergers and acquisitions, Industry, globalization and size of the enterprise, IFRS has a lot of impact on companies and has created the necessity for adoption of IFRS as international accounting standards (Kimmel, 2013). This document will focus on specific
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