Discussion response(AD)
PLEASE RESPOND TO BOTH PEOPLE DISCUSSION 100 WORDS EACH
1st person August
There has been plenty of arguments about which accounting standard is better or worse. However, in my opinion I prefer IFRS more than GAAP. One of the main reasons I prefer IFRS is because how many countries already use it worldwide and the talks of moving to a single set of accounting standards worldwide. Currently, the United States is the only country that uses GAAP in the world. According to IFRS.com, approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies, although approximately 90 countries have fully conformed with IFRS (IFRS, 2020). Also, for the United States to transfer to IFRS it would not be costly. It would most likely be cheaper in the long run because it would reduce the amount of work it takes to meet multiple regulations that they must do now. Many companies would also be able to reduce the number of reports they produce in a year from 3 to just 1 which saves time, money, and labor. IFRS would also be beneficial to American companies who are not currently doing business in foreign countries. Small business owners face a high cost of compliance since there are two sets of standards in place today, the added cost of reporting a financial statement using IFRS and GAAP can be cost-prohibitive (ConnectUS, 2019). This limits the expansion of small business in the United States to foreign markets just because of the lack of money in the businesses. Another benefit of IFRS is it would be easier to control subsidiaries from foreign countries. Currently, under GAAP in the United States organizations and their subsidiaries must create parallel reports using both GAAP and IFRS. This could result in an increased risk of errors being made and additional audit requirements to ensure proper compliance. Nevertheless, like I stated before my opinion is based on the advantages of a single worldwide accounting standard becoming adopted but, I would like to hear or see claims for the other side of the argument.
ConnectUS. (May 10, 2019). “19 Advantages and Disadvantages of Adopting IFRS.” Retrieved from
IFRS. (2020). “IFRS FAQs.” Retrieved from
https://www.ifrs.com/ifrs_faqs.html
2nd person Victor
GAAP: Generally Accepted Accounting Principles :
The United States reports by the practices set by the Financial Accounting Standards Board and then organized in the framework of the GAAP. The Securities and Exchange Commission (SEC) have been interested in switching from GAAP to IFRS, but the progress has been slow. GAAP is used when a company distributes its financial statements outside of the company. These principles address information such as revenue recognition, balance sheet, item classification, and outstanding measurements.
Under the GAAP, current assets are listed first on the balance sheet. The order of the categories on the balance sheet are different between the GAAP and IFRS. Under the GAAP, the order of categories is listed in this order: Current assets, non-current assets, current liabilities, non-current liabilities, and owners’ equity. All three methods of inventory valuation can be used under GAAP. (FIFO, LIFO, and Weighted Average):
IFRS: International Financial Reporting Standards:
The IFRS are issued by the International Accounting Standards Board (IASB) and they tell accountants specifically how to maintain and report their accounts. These standards are in place to maintain stability and transparency in the financial world. It allows for investors and other businesses to see exactly what happens within a company and will help with the decision making. It is the standard for EU and other countries in Asia and South America. The United States does not practice under the IFRS.
Under IFRS, the non-current assets are listed first on the balance sheet. Under the IFRS, the order of categories is listed in the reverse order of GAAP. Only LIFO can be used on the IFRS reports.
My preference:
I do not have any experience with either GAAP or IFRS other than course work. I have preferred working with companies that practice the standards under the GAAP rather than IFRS. It makes it easier to compare to other companies. I have had multiple assignments that I needed to compare companies and their finances. I would pick companies that use the GAAP reports to sort of make my work easier, but it also makes it easier for those reading my work.
Reference:
https://www.investopedia.com/ask/answers/09/ifrs-gaap.asp