The Similarities and Differences between the Financial Reporting Standards under United States. GAAP Versus IFRS
The purpose of the article is to review recent trends as it relates to the expected convergence process from United States Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) that will take place as early as 2015. In addition, the idea of implementing International Financial Reporting Standards (IFRS) in the United States market is not only adopting one singular accounting system but also bringing foreign cash from multinationals by lowering the repatriation tax rate under IFRS so businesses can have the competitive advantage to continue operating in the global market arena. However, the prohibition of Last-In, First-Out (LIFO) under International Financial Reporting Standards (IFRS) represents a great challenge to the Financial Accounting Standard Board (FASB) and the Securities and Exchange Commission (SEC). As a result, according to Warren, Reeve, & Duchac (2014), approximately 127 countries have already adopted IFRS and Tyson (2011) predicts that the number of countries adopting IFRS will increase up to 150 countries worldwide. Therefore, IFRS claims to be more capital oriented, to provide more relevant information for investment decision, and to reflect better a firm’s economic position than United States GAAP as predicated by Florou & Kosi (2013).
