Accounting Standards (Research Paper Sample)

Accounting Standards 
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Definition of General Accepted Accounting Principles (GAAP)
General Accepted Accounting Principles (GAAP) refer to the principles, standards and procedures that are relied on to compile the financial statements. These are used in recording and reporting financial information. GAAP provides for the minimum consistency levels used in financial statements (Generally Accepted Accounting Principles). Usually, GAAP are based on the accounting assumptions which include the accounting entity, going concern and monetary as the unit measure. The principles are uniform and are used as guidelines for purposes of financial accounting information. They establish appropriate measures and classification of financial reporting. By following GAAP, financial reports between several businesses are comparable. These encompass all entities have financial reports, all businesses have an interest to grow, and money measures business value. The GAAP includes cost, revenue realization, matching, objectivity, consistency, disclosure, materiality, and substance over form principles.
Nature of General Accepted Accounting Principles (GAAP)
GAAP has evolved over time and relate more to financial reporting an opposed to accounting. The principles function effectively where the forum is practical. GAAP have been settled on as a result of the best practices obtained from the requirements that have been used over time by financial information users. The principles are reviewed over time to ensure timely and accurate information is obtained. GAAP ensures consistency over given periods in specific business entities. In addition, there is diversity among the contributing entities and the data obtained to internal control is dependable. The GAAP settled upon depend on the entity in question, the transaction, as well as the event involved. Where no specific guideline is set, accountants rely on the practice in place over time to come up with the best applicable standards for the specific transaction (Generally Accepted Accounting Principles).
The Objectives of GAAP
* One main objective of GAAP is to help in making sure that all financial processes that are used in different jurisdictions are honest. In addition, this will facilitate all the prospective investors and creditors to make informed decisions on how they will be involved in the company.
* GAAP seeks to make sure that there are adequate measures and criterion for classification, which will be the basis of financial reporting.
* GAAP seeks to come up with a guidance, which will be used by all accountants when they record and report on financial information.
* GAAP seeks to establish an appropriate measurement, and criterion to be used in classifying all financial reports.
* The last objective of GAAP is to facilitate the development and to make sure that organizations maintain a central source where they will get timely fiscal information. This will be used in describing the financial state, promoting stewardship in reporting on public resources and providing data for analysis, which are used by deferent people such as administrators, legislators, and other stakeholders. The International Accounting Standards Board makes up these standards, which state how different transactions (Jenkins, & Mazza, 2014).
Definition of International Financial Reporting Standard (IFRS)
IFRS are a set of principles that are accepted by the GAAP, which most companies use in preparation of financial statements. This is a critical source that has information that is published at least on an annual basis, which is used by different stakeholders to make an understanding of the financial performance of the company, and to oversee the stewards in managing all the resources. Initially, these standards were referred to as the International Accounting Standards, but they were re-branded in the year 2000 (Cameran, Campa, & Pettinicchio, 2014).
Nature International Financial Reporting Standard (IFRS)
One major feature of IFRS is to make sure that there is a fair presentation that the presentation of transactions is made in a faithful manner. In addition, these standards make sure that all events and conditions are in accordance to the accepted criterion on which all assets, liabilities, incomes and the expenses are all set out in line with the framework that is established by IFRS(Cameran, Campa, & Pettinicchio, 2014).
IFRS makes sure that there is some frequency that financial reporting is not done at intervals that are very long. These standards have different time periods for different organizations, where listed companies are expected to publish reports that are IFRS compliant, at least once in a year (Cameran, Campa, & Pettinicchio, 2014).
The nature of the IFRS makes sure that different stakeholders can compare all the reports that come from different companies (Cameran, Campa, & Pettinicchio, 2014). For example, any interested individual can be in a position to analyze financial reports from two or more different companies, and make an informed decision on which company is doing better than the others.
Objectives of International Financial Reporting Standard (IFRS)
* The first objective is to develop one set of standardized high-quality standards that are understandable, can be enforced, and those that are acceptable across the world. For a standard to meet this, they need to be of a high quality, encourage transparency, and yield information interested stakeholders can comfortably compare.
* Having set out the standards that IFRS has come up with, their other objective is to make sure that they promote these same standards, and to ensure they are utilized rigorously across the world.
* To develop standards that work in the diverse economic settings, this will make them acceptable and those that take the economic condition in the country(Cameran, Campa, & Pettinicchio, 2014).
Differences between GAAP & IFRS
The first difference between the two is in...