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IFRS Accounting Standards & US Corporations

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IFRS Accounting Standards & US Corporations

Category: Coursework

Subcategory: Accounting

Level: College

Pages: 1

Words: 275

Institution Affiliation
TO: Conor and Martin
FROM: Accountant
DATE: 20 July 2018
Financial reporting is a crucial part for each company. International businesses are required to have a common standard of making financial reports. As CMC decides to venture into the global market, there are several issues to take into consideration. International business comes with its financial standards. The standards must be followed to maintain a smooth running of the company. There are two significant financial reporting standards namely International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). The international standards are set up to ensure a swift operation in accounting and report making.
The company must establish some convergence between US GAAP and IFRS to operate efficiently. Convergence means that the two standards work together to give the best quality in terms of accounting standards. The two rules have significant differences. US GAAP is a rules-based standard while IFRS is a principles-based method. Differences are seen in the revenue recognition, inventory valuation and financial statements consolidation (Lin, Riccardi & Wang, 2013). To avoid confusion and promote transparency, the convergence of the two standards is essential. International business requires the inception of an accepted standard in the region. Such factors sh…

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