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Comparing IFRS To GAAP: International Financial Reporting Standards

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Comparing IFRS to GAAP
IFRS stands for International Financial Reporting Standards and is a set of accounting standards developed by and independent, not for Profit organization called the International Accounting Board. GAAP are the standard framework of guidelines for financial accounting used in any given area or jurisdiction. They are known as standard accounting practices. I will touch on some of the areas where these are similar and different to help define each. The given information will help you decide which standard is the best practice for a company. IFRS 2-1
IFRS does not require a specific order of accounts on the statement of financial position. It is recommended that companies report assets in reverse order of liquidity. …show more content…

Under IFRS, the Statement of Final Position is the equivalent of the Balance Sheet under GAAP. They are both designed to show a comparison of assets to liabilities and equity. The IFRS, Shared Capital Ordinary is what they use instead of calling it Common Stock. These terms both represent the equity acquired by owners in exchange for cash. The term Share Capital Ordinary is most commonly used in the European Union, so IFRS chose this as their norm. IFRS 3-1
The United States has long established the GAAP accounting rules and adopting the IFRS standards would be a major undertaking. Millions of businesses apply the GAAP rules and changing over to the IFRS standards would cost billions and billions of dollars. The dollars would be the most costly in training the accounting professionals to change over to the new standards. There would also be the change over of the computer technology, such as software and accounting systems. The SEC if the benefits of switching over would justify the burden to domestic businesses in the …show more content…

They both seem to have adequate standards that would secure accurate recording of financials within an organization or company. The only major differences that seem to have an impact are the changes in terminology for the GAAP definitions and the IFRS definitions. The cost involved to American companies seems to outweigh the reason to change if they are so similar. Sox being implemented in the U.S. provide a stronger of a base to avoid fraud and protect investors. Looking at the differences between to two standards, while they do vary in some areas, they seem to run along the same lines to make accounting accurate. Justification between the two has not been established and looking the cost of training to switch to one standard does not justify

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