Ifrs Vs Gaap Essay

576 words - 3 pages

The IFRS is a better accounting standard system than GAAP because it is used internationally as the primary standard accounting system and it has more enhancing qualities
First the IFRS is use internationally as the primary standard accounting system for at least 151 countries (European Union) consisting of two organizations overseeing practices (IFRS and IASB). The IFRS were created plans as a common worldwide language for business affairs. So companies accounts were able to be understandable and comparable across international boundaries. They are a set of conditions of building international shareholding and trade and particularly important for companies that dealing in several countries. They are willing and ready to fight replacing the mainly different national accounting standards. The GAAP is only use by the United States for stock exchange and corporations within the United States but a ...view middle of the document...

The American Institute of Certified Audit Public Accounts publishes the Accounting Guidelines, Statements of Positions, and Practice Bulletins. The Financial Accounting Standards Board publishes the Statement of Financial Accounting Standards and Concepts, Interpreting, and Technical bulletins. The SEC works closely with various private groups setting GAAP, but does not set GAAP, itself.
Secondly, IRFS has more enhancing qualities than GAAP. Starting with the format of a statement of financial position from a balance sheet the systems differs. For the IFRS items such as property, plant, and equipment can be reported at current fair values rather than historical cost. This helps to reduce fraud and increase investor confidence in financial reports. On GAAP property, plant and equipment is listed as historical cost. Meaning there were no change in no value over the years since the date it was purchase. Items depreciate such as equipment and building over time and the value goes down. When it comes to conceptual framework the differ in terms of the objective of financial reporting the IFRS separately are directed to regard to and consider the appropriate concepts in the framework when developing accounting management in the absence of a standard or interpretation that specifically applies to an item. Under U.S. GAAP, the Conceptual Framework cannot be applied to particular accounting concerns. Some terms that are commonly use under IFRS are synonymous with common stock and balance sheet are Share Capital Ordinary for common stock and Statement of Financial Position for balance sheet. If the SEC considered to adopting the IFRS there are several aspects that must be considered. For one how much would it cost entrepreneurs, partnerships, and corporations to switch over the IFRS and what will the overall costs impact business daily operations. It also would change the educations requirements develop by Accounting firms. Overall it would protect the investors from fraud the main purpose of the SEC existence. Second, with one of the main purposes of the SEC is to protect their investors from fraud, the...

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