Major effect switching accounting standards from NGAAP to IFRS

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Major effect switching accounting standards from NGAAP to IFRS

Category: Accounting

Subcategory: Business

Level: University

Pages: 3

Words: 825

The US GAAP (Generally Accepted Accounting Principles) is a set of commonly acknowledged principles in accounting that determine the earning and value the assets of American companies for the last 75 years. Companies outside the U.S., have been using different globally standards called international financial reporting standards, IFRS. However, the country is now adopting the global standards, but it is not a smooth transition. Experts have diverse opinions on the implications of this shift but they all agree that the move has both positive and negative impacts (Lin S, Riccardi W & Wang C. 2012, 648). It goes without saying that the GAAP and the IFRS are entirely different because the former is more form driven and based on rules. On the other hand, IFRS is more reliant on perceptions and far-reaching principles. It typically focuses on the fundamental substance of the business than on its legal form. This essay aims to discuss the potential effects, and ethical issues brought about by the US transition from GAAP to IFRS. Effects of Switching From GAAP to IFRS In 2002, the IRFS started acquiring momentum after the European Union made a decree that all its member states should start using them. Between 2003 and 2005, over 7000 companies went through the GAAP to IFRS transition. Today, over 100 countries use IFRS, and the U.S. has recently joined them. The worldwide adoption of IFRS is a fundamental economic transformation that will give rise to a critical line of research. As an accounting professional or owner of any…

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