Ifrs And Fasb Comparison On Accounting Errors

1207 words - 5 pages

Jenna Brooks Summary on Research for Accounting Changes and Error Analysis

Companies have always faced issues of how to reflect changes in accounting methods and error corrections in financial statements. A change in accounting principle results when an entity adopts a generally accepted accounting principle different from the one it used previously (Hall 2007). A presumption exists that an accounting principle once adopted shall not be changed in accounting for events and transactions of a similar type (Financial Accounting Standards Board). It is preferred that consistent use of the same accounting principle from one accounting period to another is used because it enhances ...view middle of the document...

They both indicate that companies should retrospectively apply the direct effects of a change in accounting policy. Retrospective application is applying a new accounting policy to transactions, other events and conditions as if that policy had always been applied (International Accounting Standard 8). For example, if there is a change in inventory accounting method, such as LIFO to FIFO there is an adjusting entry to change inventory according to the new method. A company should change the inventory amounts in prior periods to indicate the new change to the FIFO method. The company should adjust the opening balance of each affected component of equity for the earliest prior period presented and the other comparative amounts disclosed for each prior period presented as if the new accounting policy had always been applied (Hall 2007).
The Accounting Principles Board use to require most changes in accounting principle to be accounted for by what is referred to as the cumulative effect method. This method requires the cumulative effect of the change to be included in the determination of net income of the period of the change (Williams and Carcello, FASB Statement No. 154, Accounting Changes and Error Correction. 2005). It showed the cumulative effect of the difference between the two accounting principles in the current income statement (Bloom and Fuglister 2006). Now, companies no longer report a cumulative effect on the current year's income statement, instead, they report any necessary adjustment as an adjustment to the opening balance of retained earnings for the earliest period shown. Before requiring the retrospective approach the APB was concerned that the retrospective application and restatement of previously issued financial statements might erode investor confidence in financial reporting (Hall 2007). They worried that investors would put less confidence in the financial statements because they were going around and being changed, causing multiple changes instead of keeping things consistent. In addition, they argues that the cost of changing prior period financial statements may be excessive. However, FASB rejected these notions and instead seemed more concerned about the consistency between accounting periods and the comparability of financial statements among different companies. FASB said the improved consistency and comparability would enhance the usefulness of financial information by facilitating the analysis and understanding of more comparative accounting data (Hall 2007). FASB argues that this approach provides financial statement users with more useful information. The retrospective approach eliminates all cumulative effect adjustments to current income and should greatly enhance the consistency and comparability of financial information over time and between companies (Hall 2007).
While there are similarities between IFRS and GAAP in accounting for accounting changes and errors, there are some...

Other Essays Like Ifrs and Fasb Comparison on Accounting Errors

A Theoretical and Historical Comparison Debate Paper on the Beliefs and Perceptions

859 words - 4 pages offensive accusation on those who follow witchcraft because it says that witchcraft can in no way be considered a religion simply because its beliefs and practices differ than other religions. However, the fact still remains that due to outside media such as movies and television series, witchcraft implications have remained to be seen as negative and unworldly with no values, and of course in connection to "Satanism". Yet, witchcraft is still

For This Pieces Of Coursework I Had To Visit Two Places Of Worship And Write A Comparison On Them

4704 words - 19 pages for guidance just like other Reformed Churches.St Benedicts church from the outside is incredibly flamboyant. It stands high above houses. You are able to see the huge stain-glass window and large entrance. By having steps at the front it makes the church even more important. The United Reformed church on the outside is a large church. There is a modern wing added on which is a centre for the worshippers. In contrast even though it is still quite a

What Impacts And Consequences Does Murder And Death By Natural Circumstances Have On Those Around It? Comparison Of "Chronicle Of A Death Foretold" And "Kitchen"

1504 words - 7 pages my grandmother died, I couldn't sleep". As you can see she has suffered a deep mental anguish as she couldn't find peace after her grandmother's death, the death was especially painful for her because she was Mikage's only remaining close relative since her parents and grandfather both died when she was young.Guilt is another impact of death that appears in both texts and has a profound impact on others around the deceased. When Yuichi calls and

Analytical Comparison Focusing On Visual And Language Techniques In Portraying Vision Of Australia In Dorothea Mackellar's - "My Country" And Max Dupain's - "Sunbather"

1114 words - 5 pages on more than just facial image. On a second level, because has no face; he can be anyone, every Australian. He can represent everyone because he has no individuality himself.These elements used to represent the person in the photograph reflect what Australia and Australian people are like.The sunbathing figure is the focal point of the photograph representing how the Australian image and people are a vital part of our culture and heritage. This

Comparing Ifrs to Gaap

676 words - 3 pages significant. FASB and IASB are working together to bring congruence between GAAP and IFRS accounting standards. Both systems provide quality accounting standards with great reporting. However to have one standard to follow that can be a universal language globally would allow accounting systems to be superlative. References Spotlight on Work Plan for Global Accounting Standards. (n.d.). Retrieved from https://www.sec.gov/spotlight/globalaccountingstandards.shtml Current Major Differences Between IFRS and US GAAP. (2010). Retrieved from http://post.nyssa.org/nyssa-news/2010/04/current-major-differences-between-ifrs-and-us-gaap.html

Us Gaap Convergence with Ifrs

1699 words - 7 pages communications and software systems. There will be a need for two sets of books, one in IFRS and one in US GAAP for two years prior to this transition for comparison purposes. Not only that, regulators, CPAs and investors would also need to be educated to gain expertise on global accounting principles. Furthermore, in preparing for the statement of income, the two standards have different sets of requirements to display in the statement. US GAAP provides

Accounting Standards Board Paper

1219 words - 5 pages Accounting Standards – releases indicating required accounting methods and procedures for specific accounting issues. 3. Interpretations – Modification or extensions of issues related to FASB. 4. Technical Bulletins – guidance on accounting and reporting problems issued by the staff of the FASB.” (Equivalents of IASB and FASB Original Pronouncements). Achievements 1. 2000 – (IOSCO) endorsed IFRS for cross-border securities offerings 2

Intermediate Financial Accounting

5060 words - 21 pages . F 8. Committee on Accounting Procedure. F 9. Passage of FASB standards. T 10. Financial Accounting Concepts. T 11. Creation of Accounting Principles Board. F 12. FASB Codification. T 13. Code of Professional Conduct. F 14. GAAP and political action. T 15. Public Company Accounting Oversight Board. T 16. Expectations gap. F 17. Financial reports. F 18. Fair value information. F 19. International Financial Reporting

Financial Accounting Boards

1186 words - 5 pages Accounting Standards Board The Financial Accounting Standards Board (FASB) oversees and constructs the reporting standards for financial accounting for the public to view. Standards are imperative, due to the decisions made about the administration of resources; these standards aid companies and the economy to operate cohesively, because the FASB relies greatly on concise, understandable, and reliable financial information. The information submitted


1430 words - 6 pages at this point in time. 

In our view, the condorsement approach contains elements that many would have expected, e.g., an ongoing role for the FASB and the capability and flexibility needed to ultimately control financial reporting in the U.S. without having to completely rely on the IASB. However, while the intent is for the “new U.S. GAAP” to be viewed as fully conforming to the requirements of IFRS, FASB maintains the responsibility for

Accounting Principles

1686 words - 7 pages accounting principles. The convergence will also assist in the reduction of costs of preparing amalgamated financial statements of companies operating across the globe. Both the US GAAP and the IFRS have some common features like the same principles and framework. On the other hand, US GAAP is rule based whereas IFRS is principle based and it provides fewer details. This paper focuses majorly on the comparison of principle-based and rule-based

Related Papers

Impact Of The Adoption Of Ifrs On Accounting In Usa

542 words - 3 pages Impacts of the adoption of IFRS on accounting in US. As globalization becomes popular in the world, the global accounting standard for the business enterprises which are globally operating should have to be developed. International Financial Reporting Standards, IFRS, would solve this issue for the global businesses to have a clear, accurate and consistent common set of accounting reporting standards. There are more than 100 countries that have

Comparison On Bc And Alberta Post Secondary Reporting

4004 words - 17 pages Ministries prepared a report on the fiscal results. An Annual Report in Alberta or Annual Service Plan Report in BC which detailed the results for the year. These documents were made available to the public late in the year of 2013. In both cases the documents included results of the specific performance measures as well as some commentary on primary objectives. Both provinces reported on their results and provided a comparison of the actual

Perceived Threats Of Computerized Accounting Information System And Provides Suggestions On How To Prevent The Occurrence Of These Potential Dangers

1978 words - 8 pages AbstractThis essay briefly introduces the perceived threats of Computerized Accounting Information System and provides suggestions on how to prevent the occurrence of these potential dangers. Though the computer technology makes the accounting operation more accurate and faster, this still involves several threats in terms of the security and reliability of the accounting information. Fraudulent activities, management cheats, virus infection

. Amos Mccoy Is Currently Raising Corn On His 100 Acre Farm And Earning An Accounting Profit Of $100 Per Acre. However, If He Raised Soybeans, He Could Earn $200 Per Acre. Is He Currently Earning An...

909 words - 4 pages . Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100 per acre. However, if he raised soybeans, he could earn $200 per acre. Is he currently earning an economic profit? Why or why not? 2. Determine whether each of the following is an explicit cost or an implicit cost: a) Payments for labor purchased in the labor market b) A firm’suse of a warehouse that it owns and could rent to another firm