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IFRS AND GAP CONVERGENCE - Essay Example
Finance & Accounting
Pages 4 (1004 words)
IFRS AND GAP CONVERGENCE Globalization has changed the capital markets dramatically and these changes are visible in every field. Technological advances are now carried forward keeping in mind the need of the entire world rather than one country. The world is now a global village and every step taken by a company has implications that reach every corner of the world…
GAAP stands for General accepted accounting principles and are the set of standards developed by US, keeping their needs in mind. On the other hand, IFRS stands for international financial reporting standards are standards developed by UK. In the past financial statements were relevant to these respective countries only but globalization has called for the need of one set of standards. Convergence of international accounting refers to the goal and the path taken to reach one set of standards that are followed throughout the world. The goal is to eliminate the differences and to improve the standards. Various accounting textbooks now feature a mixture of both standards, by presenting financial statements in both formats. The aim is to inform students about the difference in language and presentation so that they apply the relevant standards in future. Currently both organizations aim to converge GAAP of US and IFRS of UK and later they plan to develop one set of standards for the world. ...
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