...Accounting Principles (GAAP) is the standard platform of guidelines that governs the rules of financial accounting utilized in the preparation of financial statements. The US GAAP can be quite flexible in its interpretations and rulings, but the framework of GAAP is based upon certain constraints and principles in the preparation of financial reports. This paper shall endeavor to address the organization of GAAP and some of the specific areas of its governing responsibility. BODY GAAP is defined as a set of accounting patterns that are required to prepare and report the financial statements of public and private companies and non-profit organizations in the United States. It hand down the standards and rules for the aid of accountants so that they can record and prepare a summary of their transactions, for their financial statements. The Governmental Accounting Standards Board (GASB) in the United States is responsible for codifying the rules of GAAP that is referred to as US GAAP. In the United States, the American Institute of Certified Public Accountants (AICPA), The Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) provide guidance, assistance, and enforcement of the standard acceptable practices of accounting. GAAP is used to prepare all the financial documents of a company and increase its understandability and faithfulness for the investors. Without GAAP, companies would not have to follow a standard format and...
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...of IFRS and GAAP on Auditors Acc 576 Auditing and Business Concepts Abstract The convergence of IFRS and GAAP continues to present professional challenges for U.S. auditors, it also presents career opportunities for auditors who encompasses the idea of globalized change. The convergence of accounting standards is changing the attitudes of CPAs and CFOs as far as internal accounting is concerned and how the quality of the International Accounting Standards will affect it and the efforts made toward converging IFRS and the GAAP standards. Create an argument for or against the IFRS and GAAP convergence process versus a pure adoption of IFRS in the context of impact to the public accounting profession. With Business and finance globalization, almost a hundred countries have adopted IFRS. Approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies, although approximately 90 countries have fully conformed with IFRS as announced by the IASB and include a statement acknowledging such conformity in audit reports. Motivations for convergence include the belief that it will result in increased comparability between financial statements, which will benefit a variety of stakeholders. One would need to weigh the benefits of a one time cost for transitioning fee, the ability to compare reports, and the benefit of using a single reporting standard for businesses. Assess the cost impact for or against IFRS and GAAP convergence...
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...Principles and Regulations Project In accounting there are five main principles or regulations that are talked about the ost. The five are GAAP, SEC, FASB, IFRS, and SOX. All of these regulations and principles have a huge impact on how the accounting profession is run and how companies keep their records. Some help with the security of customers and books while others create standards and regulations. GAAP- Generally Accepted Accounting Principles Generally Accepted Accounting Principles or GAAP are all of the accounting principles and standards that most companies and states use to run and regulate their businesses. It is a general principle that all businesses can follow without many hiccups. The main purpose for GAAP is to organize all accounting records, organize information about a company, disclose information about a company that investors can use, and to create financial statements. There are 10 fundamental parts of GAAP that keep everything flowing smoothly. First is Economic Entity Assumption which allows a sole proprietorship to be split into owner and sole proprietorship in accounting but then get put together as one entity out of the accounting books. Next is Monetary Unit Assumption which makes it so the only transactions that can be recorded in the books are U.S....
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...In this discussion, you will delve deeper into GAAP by identifying and discussing its five key principles. Being able to identify and apply the key GAAP principles will help you better understand why accounting information is recorded the way it is. Describe the five key principles of GAAP. What is the importance of each principle? How does each principle affect the presentation and inclusion of accounting information? In response to your fellow classmates, discuss why small businesses should follow these five key principles of GAAP. Generally Accepted Accounting Principles, commonly referred to as GAAP, are the mandated accounting standards used to ensure a basic level of financial reporting consistency among public companies. The five key principles of GAAP, which were created by the FASB, for the purpose of improving trust in U.S. businesses and to improve the quality of financial record keeping. GAAP lay out five main principles for accountants to follow. The cost principle states that "cost" always refers to the amount initially paid for an item and accountants should not adjust upward for inflation. The full disclosure principle requires accountants to disclose all pertinent information, often in pages of footnotes to the financial statement. The going concern principle assumes a company “will continue to exist long enough to carry out its objectives and will not liquidate in the foreseeable future,”...
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...will be on, such as on the financial statements, on internal controls, etc. You should also include if any disclaimers should also be issued. a. A compilation report should be issued that describes what the compilation engagement was and an opinion. b. A review report should be issued and it should describe the review and give an opinion. c. No report is needed d. An audit report should be issued describing the audit and an opinion. The internal controls should be the focus of the report. e. An audit report should be issued. Review report should also be issued for the quarterly statements since they are associated with that as well. 16-40 In this example, the audit report given has at least 20 errors. To earn full credit, you need to identify at least 10 of them. You should compare this report to the examples in the book, looking closely at any differences, even if they seem insignificant. I’ll give you an example, and feel free to use this one as a freebie in your own answers. The date at the bottom of this audit report is the balance sheet date. The date that should be used on the audit report is the date the report is given to the client. (See what I...
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...GAAP or IFRS WHEN WILL WE CONVERT? Paris Williams 10/1/2013 The accounting profession is on the verge of one of the most significant changes since the 1930s. In the very near future there is a great possibility that the United States Generally Accepted Accounting Principles (GAAP), as it is known today, will be replaced by the global standards known as the International Financial Reporting Standards. This paper will provide a history of IFRS and discuss the time frame of the conversion, along with is effects on U.S in the accounting perspective. Over the past few years, much talk of U.S adopting the IFRS as the basis for accounting principles has circulated amongst the accounting and business world. Although many may resent the conversion from U.S Generally Accepted Accounting Principles (GAAP) to the London-based International Financial Reporting Standards (IFRS), the movement has already began. Plans for this movement have already been proposed and put into effect, project and trials are being observed, and results are soon to come as the SEC and others make their final decision. However, with such a complex transition one must propose many questions such as, how will the movement affect us? What are some of the advantages and disadvantages? How do we adjust, and what is the ultimate benefit and purpose of converting? GAAP and IFRS are two separate sets of accounting standards used in different countries of the world. Although they both have the same...
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...step to understanding taxes is to first understand why we have taxes in the first place. As citizens many people take for granted what benefits we gain from the government developing the country around us. The various infrastructures, public systems, education, and the very safety of the citizens in a country are all affected by government funds. People generally are unable to pay for these services directly out of their own pockets, so the government provides for the care of its citizens out of its own funds. As most people know, the United States tax system is special in that citizens generally can pay taxes to a variety of levels: federal, state, and even city taxes depending on where you live. Regardless of whom you pay taxes to, or if you live in the United States or in some other country around the world, the objective of income taxes still remains the same. Just as was mentioned in the previous paragraph, taxes are used to fund various government activities that affect the citizens of a country throughout their everyday life. Income taxes provide a way to ensure that the government is able to collect revenue from its citizens efforts at a variety of governmental levels to provide proper care and service for its people and keep the country running. After understanding why taxes are important, another important aspect to understand is how tax accounting differs from Generally Accepted Accounting Principles (GAAP) that most businesses in the United States use for...
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...management, the accepted accounting principles, and a few general financial, ethical standards will conduct. Plus, there would be examples of conduct and financial reporting practices in the health care organizations from other articles that will be discussed. The four elements of financial management are planning, controlling, organizing and directing, and decision making. The first element, planning is to set up the health care organization goals and objectives. Then to see what steps have to take and which steps would be more effective to achieve the goal. The second element is controlling; as a financial management will need to consist of verifying whether the department is following the plans, instructions issued, and the principles established. The third element is organizing and directing; which this can be a process that follows planning and controlling element in the health care organizations. While organizing established how resources can be effective and how to accomplish the goals. As directing is to instruct, guide, and oversee the performance of the employees to accomplish the organizational goals. The final element of financial management is decision making; this will process of choosing the best alternative to achieve the organizational goals through evaluating and analyzing. As all the elements come together in the health...
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...IFRS vs. GAAP: Same or Different ACC407 January 27, 2013 Catherine McBride IFRS vs. GAAP: Same or Different The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are working on nearly a dozen joint projects designed to improve both U.S. Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), and ultimately make the standards fully compatible. But in the mean time, the two predominant accounting standards to this day are the U.S. GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards). These two standards have several differences because they both take a completely different approach to their methodology. The U.S. GAAP is more rule-based, where IFRS is principal-based. With IFRS's principal-based approach, a lot of room was left open for interpretations for similar transactions. It gives room for second guessing, debate and conjecture. Anytime you have a fundamental system that can be debated you create a forum of uncertainty that then requires an arbitrator who can settle the dispute. This arbitrator is called the standards setting board, and it provides fewer exceptions than a rule based system (Parrott, 2008). With the U.S. GAAP you have a rule-based system. This is a more clear approach that distinguishes between what seems correct and what is correct. There is no room for interpretation. Each process has a set...
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...COST CONTROL GROUP-3 PRESENTED BY:AKSHAY ESHAA RANJAN SAI CHARAN SHARATHCHANDRA H J VIKASH INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) CONTENTS :INTRODUCTION OBJECTIVES OF IFRS STANDARDS OF IFRS WHY IFRS IS PREPARED ? ADVANTAGES AND DISADVANTAGES INDIAN ACCOUNTING STANDARDS Differences between ifrs , ind gaap and us gaap INTRODUCTION :- IFRS is set if international accounting standards developed by IASB (International Accounting Standard Board) under the governance if IFRS to set a high quality accounting standards. There are 120 nations who are following IFRS. WHAT IS IFRS ? International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. OBJECTIVES OF IFRS To develop, in the public interest, a single set of high quality and globally accepted financial accounting standards. It is to promote the use and rigorous application of those standards. Transparent for all users and comparable over all periods. Provides a suitable starting point for accounting in accordance with IFRS. Can be generated at a cost that does not exceed the benefits. WHY IS IFRS NECESSARY ? It is believed that IFRS, when adopted worldwide, will benefit investors and other users of financial statements by reducing cost of investments and increasing the quality of information provided. Furthermore...
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...and the need for accuracy has increased and many guidelines have been established to ensure there are competencies, and ethical standards are upheld in financial management in health care organizations (Paul, 2008). The Four Elements of Financial Management Health care organizations and other organizations require an array of management actions to operate effectively (Baker & Baker, 2010). To accomplish these actions the four elements of financial management must take place. The financial manager must identifies the objectives and steps through planning, the financial manager must ensure that the organization follow the plan by using the controlling element, the financial manager must organize and direct by deciding how to use the resources of the organization, and provide daily supervision (Baker & Baker, 2010). In addition, the financial manager must make informed choice through the element of decision- making (Baker & Baker, 2010). The General Accepted Accounting Practices In order to have guidelines in the principles of accounting, it is a mandatory requirement that health care organizations and other organizations use the General Accepted Accounting Principles, also known as the GAAP (Paul, 2008). The General Accepted Accounting Principles are the accounting regulations used to prepare and regulate the reporting of financial information, such as balance sheets, income statements, and cash flow statements (Paul, 2008). Compliance with the GAAP helps...
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...CHAPTER 2: REGULATION IN FINANCIAL ACCOUNTING Chapter 2 regulation in Financial accounting LEARNING OUTCOMES Upon completion of this chapter you should be able to understand: • The difference between management and financial accounting. • Why accounting regulations are important and required. • The need for and the structure of professional regulation, company law, stock exchange legislation and EU Directives. • How the different aspects of regulation work together and complement each other. • The process through which an accounting standard comes into being. REVISION RESOURCES EXAM QUESTIONS: Sample and Past papers are available from the website of Accounting Technicians Ireland and are essential aids when studying Advanced Financial Accounting topics. 7 Chapter 2 : Regulation in Financial Accounting 2.1 Advanced Financial Accounting the FunCtion oF FinanCial aCCounting and reporting The International Accounting Standards Board (IASB) in their Conceptual Framework for Financial Reporting state that ‘the objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity. Those decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit’. This Conceptual Framework...
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...What should Martin Field of RUN Inc. do? Why? Marcus Banks Professor Thomas Package Business Ethics September 29, 2015 Immanuel Kant's commitment to our investigation of business morals is fundamentally noted in Moral Duty, Rights, and Justice. Kant discusses the Categorical Imperative. Absolute objectives are ruled that are characteristically substantial; they are great all by themselves; they must be obeyed by all, in all circumstances and circumstances, if our conduct is to watch the ethical law. Kant expressed that the ethical means can be connected to the clear cut basic, that normal creatures can seek after specific "closures" utilizing the fitting "means". The straight out basis may be constructed just with respect to something that is an "end in itself". That is, an end that is a method just to itself and not to some other need, desire, or reason. Kant trusted that if an action is not completed with the thought process of duty, then it is without good esteem. Each activity ought to have an immaculate goal behind it; else it was inane. The clear cut basic has three details that Kant specified about good. These three formal conditions that an activity must have in the event that it is to be an ethical activity. The principal that detail how an action to be an ethical correct, it must be manageable to being made reliably all-inclusive. The second definition expresses that for an action to be ethical correct, it must regard sensible persons not as means to...
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...2012 Sources of GAAP and Source Hierarchy According to our textbook Financial Accounting, “General Accepted accounting principles (GAAP) have substantial authoritative support. The American Institute of Certified Public Accountants (AICPA’s) code of professional conduct requires that members prepare financial statements in accordance with GAAP. Specifically rule 203 of this code prohibits a member from expressing an unqualified opinion for financial statements that contain a material departure from general accepted accounting principles” (Kimmel, Weygandt & Kieso, 2007, p. 12). According to (Kieso, Weygandt, & Warfield, 2007), General Accepted Principles (GAAP) are an established common set of accepted accounting principles procedures, and standards made over time by the AICPA, a national professional organization of practicing Certified Public Accountants (CPA’s). Because of the industrial growth, its capital markets and after the great depression of 1929, the federal government established the Security and Exchange Commission (SEC) to protect stockholders investments. However, the SEC discovered that many non-public trade organizations did not fall under their security laws and their jurisdiction and they developed a two part sectors, AICPA, and the Financial Accounting Standard Board (FASB) to establish, and improve accounting standards and principles. The FASB is working on a standard that defines the meaning of GAAP called, the Hierarchy of GAAP, to identify accounting...
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...Case Analysis 10-3 Kansas City Zephyrs Baseball Club, Inc. I.Issues Why does net income not equal cash flows? Why do we need accrual accounting? (Why do not we fire all accountants and just publish summary bank statements) Why do the differences between owners’, players’, GAAP and truth number exist?(Can accounting numbers be neutral representations of what happened? What happens if a retired non-roster player (e.g. Joe Portocararo) returns to the active roster while continuing to earn the same money promised him in his guaranteed contract? Of what importance are the periodic net income numbers if the clubs can always be sold for huge profits? How should Bill Ahern resolve the accounting conflict between the owners and players? How much did the Kansas City Zephyrs Baseball Club earn in 1983 and 1984? Facts This case shows that how different accounting methods can lead a company to different positions. That is what Bill Ahern was selected on April 9 to focus on reviewing the finances of the Kansas City Zephyrs Baseball Club, Inc., which was bought on November 1, 1982 by five shareholders for $24 million, because both the representatives of the owner of the 26 major league baseball teams and the professional players association agreed that Kansas City Zephyrs Baseball Club’s operations were representative, and the baseball club entity was not owned by another corporation, and it did not own the stadium where they play. So Bill Ahern was reviewing their finances on April...
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