This report provides an insight into the implementation of the International Financial Reporting Standards (IFRS) in Australia and various countries across the globe. The report begins by elucidating the difference between the General Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). The IFRS accounting principles enable accountants to prepare standard financial reports worldwide.
The purpose of the IFRS is to avail relevant information that pertains to the financial status, financial performance, and related cash flows of corporations to accountants. The report proceeds to explain that the information provided by the IFRS enables accountants to make appropriate decisions with respect to impending economic benefits based on the current value of a company. On the other hand, this report elucidates the meaning of the GAAP standards that are adopted by many countries especially in the United States.
The Generally Accepted Accounting Principles represent a set of accounting standards that provide professional guidance to accountants internationally. The accounting standards enhance their professional abilities to deliver relevant records and reports that pertain to financial performance of organizations. GAAP and IFRS standards have various similarities with respect to their functionalities. Nevertheless, whilst the GAAP accounting standards seek to provide full disclosure of financial statements of organizations, the IFRS accounting standards major focus is to provide financial statements that are more sensible.
This report creates an understanding of the effectiveness and ease of use of the IFRS accounting standards as compared to the GAAP standards. Moreover, the report explains how the design of the IFRS accounting standards has enabled accountants to capture the values of intangible assets in financial reports. These characteristics prove that the IFRS is a versatile accounting tool that can be used in varying financial landscapes. Furthermore, the report discusses various improvements of the IFRS and GAAP accounting standards that have led to effectiveness of financial recording and reporting. These improvements include reduction of preparation and interpretation costs of financial statements, minimization of prediction errors, and enhancement of comparability of financial statements.
The report offers a recommendation for corporations to adopt IFRS standards to increase the accuracy of determining asset values. This move will enable organizations to promote corporate financial accounting and reporting. In the conclusion section, the report seeks to show the reader that the financial market will continue to become more complex. Therefore, there is a possibility that organizations will require accounting standards that are more robust than the existing IFRS and GAAP standards in the future.
The convolutedness of present-day financial markets has created new-fangled challenges with respect to handling of financial accounts. These accounting challenges have resulted in misrepresentation of financial information that has further led to discontentment of both investors and creditors in various business corporations worldwide. Consequently, many corporations have opted to adopt methods that are more appropriate for handling their financial recording and reporting. Various governments around the world have also engaged dedicated private sectors to develop better accounting practices by assigning public authority to them.
This strategy has enhanced improvement of accounting recording and reporting by carrying out appraisals of the existing frameworks of financial accounting. The commonly known accounting standards are the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). Although these accounting standards share common goals of providing guidelines to the generation of reputable financial accounts, they differ in terms of the approaches that are used to generate financial records and reports. For instance, the GAAP standards focus on the provision of full disclosure of financial while the IFRS accounting standards emphasize on generation of specific financial statements that are more practical.
An independent board known as The Financial Accounting Standards Board (FASB) bears the obligation of establishing the GAAP standards. Generally, the abovementioned accounting standards provide clear financial accounting frameworks prior to the production of financial reports, documentation, and determination of appropriate means of tackling financial challenges. The purpose of this report is to provide a critical examination of the implementation of the IFRS accounting standards in Australia and other countries worldwide to establish the benefits of using such accounting standards in contemporary corporations.