IFRS vs GAAP
Choosing Between Generally Accepted Accounting Principles and
International Financial Reporting Standards as Basis of Accounting Standards
December 14, 2011
Research Paper Outline:
Thesis Statement: Some experts do not prefer the adoption of IFRS principles because of its incompatibility with US Style Corporate Governance, its inefficiency compared to GAAP, and its inability to improve the present system.
I. Introduction
A. Current events about the topic (status quo)
B. Definition of Generally Accepted Accounting Principles and International Financial Reporting Standards
C. Thesis statement
II. Body
A. Major detail #1: The major difference between IFRS and GAAP is that IFRS requires more discretion and that GAAP is more principles based and detailed (Yoon, 2009). Minor detail #1: Differences between U.S. GAAP and IFRS include recording inventory, assets, and income (Briginshaw, 2008).
B. Major detail #2: Some of the primary benefits of a rules-based system include increased accuracy, reduced ambiguity and a diminished possibility of lawsuits. The major drawback to a rules-based system is the complexity in the preparation of financial statements. The major benefit of a principles-based accounting is that the guidelines can be applied in a variety of situations/industries which avoids the need of managers to manipulate statements to fit a certain need (Investopedia, 2009). Minor detail#2: The adoption of IFRS in replacement of GAAP will lead to changes in the accounting system of companies and review of the financial reports. Although it seems that the adoption will make works more complicated, many believe that this will be beneficial since it will make the comparison of one company to another easily. Even if GAAP are accurate, most of the times, they are very detailed which make them hard to analyze (Foster, n.d.).
C. Major detail# 3: The differences between the two sets of standards can be wide, permanent, and potentially
International Financial Reporting Standards as Basis of Accounting Standards
December 14, 2011
Research Paper Outline:
Thesis Statement: Some experts do not prefer the adoption of IFRS principles because of its incompatibility with US Style Corporate Governance, its inefficiency compared to GAAP, and its inability to improve the present system.
I. Introduction
A. Current events about the topic (status quo)
B. Definition of Generally Accepted Accounting Principles and International Financial Reporting Standards
C. Thesis statement
II. Body
A. Major detail #1: The major difference between IFRS and GAAP is that IFRS requires more discretion and that GAAP is more principles based and detailed (Yoon, 2009). Minor detail #1: Differences between U.S. GAAP and IFRS include recording inventory, assets, and income (Briginshaw, 2008).
B. Major detail #2: Some of the primary benefits of a rules-based system include increased accuracy, reduced ambiguity and a diminished possibility of lawsuits. The major drawback to a rules-based system is the complexity in the preparation of financial statements. The major benefit of a principles-based accounting is that the guidelines can be applied in a variety of situations/industries which avoids the need of managers to manipulate statements to fit a certain need (Investopedia, 2009). Minor detail#2: The adoption of IFRS in replacement of GAAP will lead to changes in the accounting system of companies and review of the financial reports. Although it seems that the adoption will make works more complicated, many believe that this will be beneficial since it will make the comparison of one company to another easily. Even if GAAP are accurate, most of the times, they are very detailed which make them hard to analyze (Foster, n.d.).
C. Major detail# 3: The differences between the two sets of standards can be wide, permanent, and potentially
References: Alfredo, K., Leo, K., Picker, R., Pacter, P., Radford, J., & Wise, V. (2007). iiiiiApplying international financial reporting standards. (pp. 9-32). Australia: John iiiiiWiley and Sons Australia Ltd. Austin, S.G. &Tschakert, N. (2009, May 18). Major differences in U.S. GAAP & iiiiiIFRS and latest developments. Retrieved from iiiiihttp://swensonadvisors.com/assets/MajorDifferencesBetweenUSGAAPandIFRiiiiiiiiiiiiiiivS.pdf Benston, G., Bromwich, M., Wagenhoffer, A. (2006). Principles versus rules iiiiibased accounting standards. Abacus, 42. Ciesielski, J. (2008). IFRS & GAAP: The Urge to Converge. The analyst’s iiiiiaccounting observer, 17. Diana, T. (2008). Bridging the GAAP to IFRS. Retrieved from iiiiihttp://www.crfonline.org/orc/pdf/GAAP_to_IFRS.pdf Doupnik, T Ernst & Young. (2011). International GAAP 2011. (Vol. 1, pp. 14-15). Chichester, iiiiiUnited Kingdom: John Wiley and Sons Ltd. Valencia, E. G., & Roxas, G. F. (2004). Financial accounting based on iiiiiinternational accounting standards. (2005-2006 ed., pp. 4-6). Baguio City, iiiiiPhilippines: Valencia Educational Supply. Yoon, N. (2009). Advantages and disadvantages of switching from GAAP to iiiiiIFRS. Retrieved from http://digitalarchive.wm.edu/bitstre am/10288/1535/1/ iiiiiYoon2009monroeresearchpaper.pdf