GAAP vs. IFRS

Giovanni Flores

Johanna Guedea
Orlando Muñoz

ACC/290

March 10, 2015
Stephen Russell

GAAP vs. IFRS

For a long time, there have been proposals that have been working on with regard to the replacement of GAAP also known as Generally Accepted Accounting Principles with IFRS known as International Financial Reporting Standards which are used in the accounting and financial reporting aspects. But what is it that makes them both so different and so similar?
It all falls into the comparison of GAAP and the IFRS in explaining the two standards that have such enormous implications for the functions of accountants, attorneys, corporate directors and financial officers now in days. The differences and similarities between IFRS and GAAP can be quite overwhelming. Starting with the format of a statement or financial or position under IFRS how it often differs from a balance sheet presented under GAAP. Ifrs does not require a particular order or classification of accounts on the statement of financial position when GAAP does have a specific requirement that all reports are ranked on their measure liquidity. The primary goal in IFRS is to give users of financial statements a clear understanding of the companies asset structure. After the asset structure and the shareholder are reported, liabilities follow ending the financial statement, unlike IFRS, GAAP orders liquid assets first and the shareholder equity is reported very last on the balance sheet. When it comes to the conceptual frameworks in terms of the objective of the financial statement, IFRS and GAAP take a same position in regards to objectivity in financial reporting. Relevancy and faithful representation of information are known as the two main governing bodies and are both faithfully represented with consecutive standards and consistently follow the industry standards.