IFRS and GAAP Convergence - Essay Example

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IFRS and GAAP Convergence

When the financial statements are available in annual reports, it is the responsibility of the managers to evaluate and discuss results of company performance. External parties use these financial statements to analyze the company’s financial performance. Therefore, external users of financial statements are requires to be familiar with the tools and techniques which are used in financial performance analysis (Needles, Powers and Crosson, 2010, p.1270). Financial analysis includes the analysis of income statement and the assets and liabilities in the balance sheet. It can be done by implementing various tools and techniques such as: common size financial statements, comparative financial statements, ratio analysis, trend analysis, fund flow statement and cash flow statement (Murthy and Gurusamy, 2009, pp.8-9). Accounting Convergence A single set of global accounting standards has to be developed that would be used internationally for international and domestic financial reporting. In order to persuade this practice, the International Accounting Standard Board (IASB) and the US Financial accounting Standard Board (FASB) signed a memorandum of understanding, honoring their commitment towards the convergence of International Accounting Standards and the U.S. ...
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IFRS and GAAP Convergence Table of Contents Introduction 3 Accounting Convergence 3 Difference between U.S. GAAP and IFRS 4 Main Obstacle to Convergence 5 Impact on Balance Sheet and Income Statement Presentation Method 5 Most significant Affect of Convergence 6 Conclusion 6 Reference 7 Introduction In the corporate finance world, some events have shown the importance of accurate financial reporting by businesses…
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