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Jan 19th, 2011 | By Andrew


GAAP vs IFRS GAAP and IFRS are two of the accounting rules and guidelines that regulate
the financial reporting standard. All over the world, different procedures for computing
financial results of companies are being observed which are known as their versions of
GAAP or local GAAP. This is nothing but generally accepted accounting principles that are
followed in various parts of the world. The US GAAP is the one followed by the Accountan ts
for the financial reporting of the companies in US. As there are different versions of GAAP in
different countries, The International Accounting Standards Board (IASB) has been
advocating a system of accounting that is same across the globe. This system of accounting
is known as International Finance Regulation Standards or IFRS.


As described above, GAAP is the framework within which accountants in any country record
and summarize transactions, and present them in financial statements. These are the sum
total of accounting standards that are used in any country reflecting conventions, rules and
guidelines regarding preparing financial statements of any organization. GAAP is not a
single, but a framework of rules that are followed by chartered account ants and accounting
firms to prepare and present incomes, expenses, taxes and liabilities of individuals and
companies.
Presence of GAAP ensures that financial reports of different companies can be compared
and analyzed without any ambiguity and this is a major advantage to Banks, financial
experts and tax officials and even to share holders and potential investors who can compare
the results and decide upon better performing companies.

As the economy has become global and with emergence of multination als, it often becomes
confusing for the parent company to assess the performance of its subsidiary operating in
another country as accounting principles are different in both the countries. This difference in
accounting leads to many grouses especially per taining to taxation. Thus International
Accounting Standards board has taken upon itself to develop guidelines for accounting that
are applicable in every part of the globe. IFRS is a set of guidelines for accounting that is
being encouraged by IASB and th e objective is to ensure that gradually all countries
progress towards IFRS. Much has been done in the last few decades but a lot still needs to
be done.
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Like all other countries, the US is trying to change and switch over the guidelines set under
IFRS for accounting from its present accounting principles known as GAAP. Though there
are many similarities b etween the two, there are glaring dissimilarities that need to be
bridged so that accounting is finally same in all parts of the world. Let us have a look at
some of the major differences between the two.
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Read more: http://www.differencebetween.com/difference -between-gaap-

and-ifrs/#ixzz1GTShuVdx

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