How Ifrs Defines A Contingent Liability And Provide An Example Essay

The Financial Accounting Standard Board (FASB) and the International Accounting Standard Board (IASB) have been working jointly toward the convergence of the U.S. generally accepted accounting principles (GAAP) and the international financial reporting standards (IFRS). However, several arguments still exist as to whether or not U.S. companies should adopt or converge with IFRS. This qualitative study identified the differences noted between rules-based and principles-based accounting, and discussed the impact of these accounting standards on financial reporting. Additionally, several resources were analyzed to understand the path to convergence and the future state of IFRS. The examination of information regarding the transition towards one single set of accounting standards led to the

Since 2002, Financial Accounting Standards Board (FASB) and International Accounting Standards Board’s (IASB) have been working toward “convergence” of US General Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). They have made significant progress in efforts to converge critical accounting standards such as those dealing with revenue recognition, financial instruments and leases. Once these projects are complete, the "era" of convergence will be at an end. Nevertheless, the benefits for investors of eventually getting to consistently applied, high-quality, globally accepted accounting

The five research articles I have chosen to further my research on the convergence between U.S. GAAP and IFRS are The Implication of US GAAP and IFRS Convergence on American Business by Austin Willmore (2015), IFRS adoption by country by PWC (2015), International Financial Reporting Standards and American Generally Accepted Accounting Principles: the Convergence Lessons by Kuzina (2015), The economic impact of IFRS - a financial analysis perspective by Seay (2014), and Accounting for Leases The New Standard by CPA Journal (2016). These articles are related to my topic, where these researchers researched and analyzed the financial statement reporting on convergence of the U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), and certain accounts when adopting IFRS present a different result in the financial reporting for U.S. reporting companies when U.S. GAAP standards combined with IFRS. Also, these research articles discuss the existence of two systems of standards, U.S. GAAP and IFRS; and the issue and difficulty of the process to fully converge.

The convergence of two accounting systems, the US GAAP and International Financial Reporting Standards, is not a new concept. For many years, the primordial idea of convergence started in the late 1950’s in response to post World War II economic integration and related increases in cross-border capital flows. Initially, the term used was “Harmonization until the early 1990’s the politically correct term is “Convergence”.

As the responsibilities of the global harmonization of accounting standards IFRS and GAAP transfer to IASB, FASB’s influence is waning. Advantages of the convergence include high quality financial reporting, which lowers cost of capital for investors and the cost of borrowing for companies. However, there are disadvantages to be noted, such as the costs of introducing IFRS to current and potential accountants and the risk of reducing the uniformity of financial reports due to the lax rulings of IFRS, which promotes earnings management amongst companies. Although arguments regarding the convergence remain prevalent, the completion of IFRS and GAAP is inevitable. Come year 2015, accountants, investors, and companies alike will discover whether or not the pros outweighed the cons; or vice versa.

This research project will inform the reader of the difference between the United States accounting standards and International accounting standards. The United States uses the Financial Accounting Standards Board (FASB) to issue financial reporting procedures. The International Financial Reporting Standards (IFRS) are issued by the International Accounting Standards Board (IASB). There are proposals for the United States to adopt the International standards. Financial reporting procedures are debated about the United States using the Generally Accepted Accounting Procedures (GAAP) or following the global procedures. This

The FASB-IASB convergence project sought to merge U.S. GAAP with IFRS in a way that would combine the best of both standards to make financial reporting easier in a world that grows smaller each day. To say that the project was challenging would be a gross understatement; convergence faced many setbacks that arose out of disagreements about the best way to represent information for a vast set of users. One reason why disagreements arose is because the process for accounting standard-setting is considerably political. When a diverse group of people argues for the interests of massive groups of other very different people, each with their own competing interests, complications are bound to occur. Everyone brings their own issues to the table,

A joint convergence committee created the members of (FASB) and (IASB). (IASB) is recognized as an independent accounting standard-setting body that is similar to (FASB) that joins (GAAP), and is governed by the (IFRS) foundation. Due to this convergence, (AICPA) believes U.S. adoption of a single set of high-quality, globally accepted accounting standards will benefit U.S. financial markets and public companies by enabling preparation of transparent and comparable financial reports throughout the world, (American Institute of CPAs, 2016). Secondly, (AICPA) is dedicated to supplying the whole accounting profession with information, tools and IFRS.com for instance to assimilate as well as implement a new set of standards. As the (AICPA) supports continual convergence of reliable accounting standards between (IFRS) and (GAAP) the mission of completion between (IASB) and (FASB) is prolonged. (AICPA) will always support funding mechanisms of the body-making

Countries, including the US, that decide to converge with IFRS yet function under different economic and political environments will inherently implement the universal standard to fit their institutional infrastructures diminishing comparability between nations (Hail). There are significant differences in the foundation of US GAAP and IFRS, specifically IFRS’s principles-based accounting and US GAAP’s

Due to the global integration of business and finance throughout the world, approximately 113 countries have adopted or are working on convergence with IFRS. This paper is a look at the history and an examination of where IFRS stands internationally and with the United States. For several decades the industrialized world has been working toward an international set of accounting standards. Since IFRS has become the de facto international accounting language, it is logical that it will be accepted as that standard in the near future.

There is a clear roadmap to social globalization and convergence of US.GAAP – IFRS Standard as prescribed by the Security and Exchange Commission (SEC) for users that set up financial statements in accordance with IFRS as issued by IASB. This followed would lead to a worldwide adoption of IFRS over the next few years. In his work, Barry (2009, p.26-27) states, “The advantage of a single set of financial reporting standards are manifest, particularly as internationalization of business activities became the norm. In particular, having uniform, high quality standards has been extolled as fostering international business relationships, with the goal being the facilitation of cross border capital flows and lowering the cost of capital _ the expected results of the anticipated reduction of perceived accounting risk”.

The objective of this paper is to deliberate the concerns regarding implementing International Financial Reporting Standards in United States. There is no scope that IFRS standards would be fully implemented in the United States. The main reasons are two regulatory bodies Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) are unable to integrate on the concept of convergence. Due to current economic conditions, FASB and IASB came together to reduce the differences between U.S. GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). Furthermore, Security and Exchange Commission has

(b) The prior objective of mandatory adoption of IFRS is to facilitate cross-border comparability, increase reporting transparency and reduce information asymmetry and thereby enhance the efficiency and competitiveness of capital market (Horton, Serafeim & Serafeim 2013). However, applying IFRS in different countries with different enforcement mechanism can hardly achieve the accounting harmonization, because companies are still willing to adopt their former national regulations that reflect their requirements ,and therefore misled the users of financial report who do not pay attention to these systematic differences by an uniformity on the surface (Deegan 2014). In the given material, there has been various problems when EU endorse the international accounting standards. Not only did the international accounting significantly reflect the Anglo-Saxon accounting practice rather than continental European practice (Dewing & Russell 2008) but also, political, business differences might continue to impose substantial obstacles in the process of accounting convergence and standardisation. Until then, whether the financial information become more reliable and comparable after the adoption of IFRS is still

Accounting as a profession has its standards that must be followed. The standards are used across the world to enhance uniformity in the reporting framework of financial statements. This is due to the growth in the international trade and cross-boundary trade. Some of these standards include the international financial reporting standards (IFRS), the UD Generally Accepted Accounting Standards (GAAP).

The talks about convergence began in 2002 between the International Financial Standards Board and the Financial Accounting Standards Board. In 2005, the Security and Exchange Commission acknowledged that the day would come when the International Financial Standards would take precedence over the United States GAAP. In the year 2007, it was decided that foreign companies would have the ability to file financial statements in the United States without reconciling the statements to the United States GAAP. This statement modeled the first step for the United States toward accepting the International Accounting Standards. This changeover would give professionals and the Security and Exchange Commission time to inspect the financial statements in respect to the International Accounting Standards and with the Generally Accepted Accounting Standards. After this moment in time, the Security and Exchange Commission issued a road map to present a blueprint of how the convergence would take place. It stated that in between the years of 2009 through 2010, a Security and Exchange Commission staff work plan would be developed to work on the substantive details of the convergence plan (“2015-IFRS in the,” 2014). In the middle of development a Security and Exchange Commission policy statement would be issued to announce more understanding of the IFRS and how it will replace the Generally