Key Differences between IFRS and U.S. GAAP
Will adoption of IFRS cause major changes in U.S. financial reporting results?
Understanding International Financial Reporting Standards (IFRS) is critically important to management accountants, auditors, financial analysts, corporate executives, and others involved with financial reporting. More than 100 countries now require IFRS as the basis of their financial reporting and, based on a proposed timetable developed by the U.S. Securities & Exchange Commission (SEC), acceptance of IFRS in the U.S. could occur as early as 2015.
The objectives of this paper are to:
- Describe the major key differences between U.S. Generally Accepted Accounting Principles (GAAP) and IFRS.
- Compare actual financial statements in which results were reported under both IFRS and U.S. GAAP.
Differences between U.S. GAAP and IFRS can be:
- Cosmetic (e.g., different accounting equation representation, terminology, and order of liquidity).
- Substantive (e.g., inventory valuation, PP&E, leases, and deferred taxes).
- Findings indicate that differences between IFRS and U.S. GAAP appear to not lead to significant overall differences.