Globalization has led to the follow-up and teaching of IFRS in most countries. Companies in the United States follow the GAAP rules, which is complicated by American companies that want to do business internationally. Both accounting practices provided a useful and accurate interpretation of the company's financial position. However, a comparison of a GAAP financial statement with a statement following IFRS may lead to significant discrepancies
US GAAP or generally accepted accounting principles apply to financial reporting. GAAP is a rule that should be followed in the financial statements and only accepted in the US. Unlike GAAP, it is based on the IFRS or International Financial Reporting Standards. This means that during business transactions, GAAP may need to follow certain steps for recording. Although IFRS can interpret the transaction in a few different ways. Another deviation is based on the IFRS principles and the GAAP rules that in principle you can not find a loophole as easily as you can. As the principles are dragged out as a special rule, several possible threats to false reports are found. An example of this is the "fair value" used in GAAP used by IFRS-based fixed assets. Past costs were used for the asset, while "fair value" uses the asset's estimated value today. "Fair value" is extremely useful for companies who invest for something in their future economic benefits.
Another American company is characterized by double-entry bookkeeping. Reporting and auditing financial information US companies are obliged to provide us with GAPP, which is useful when comparing the financial statement with other US based companies or within the business. International reports are used and international financial reporting standards are used in more than 110 countries. (Bannister) Double-accounting work is also extensive. For example, IFRS does not recognize LIFO as an acceptable inventory system. If a product's cost increases, LIFO saves a company's money because higher costs against gross income result in less taxable income. If a company using LIFO had to produce an international report now, the inventory-related financial statements need to be reassessed to comply with IFRS. (Intuit Team) This double account is a further disadvantage than US accountants do.
US-trained auditors learn how to comply with GAAP in financial reporting and are certified by the CPA exam. At the same time, they are not taught to comply with the IFRS principles, so they may not prepare the best IFRS financial statements. This is bad for the company that reported the information because it is not necessarily the best report for the company. It is also disadvantageous for accountants in the United States. In an increasingly globalized economy, accountants who meet only one country's accounting rules are less valuable than accounting records that are able to comply with accounting principles in more than 100 countries
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