frequently in the next sections of the
course you will hear us talk about US GAAP and the IFRS so it would be best to
provide a refresher and describe what these abbreviations represent before
continuing US GAAP stands for US generally accepted accounting principles
every country has its own generally accepted accounting principles these are
the rules companies in a particular country must comply with and adhere to
when preparing accounting entries and financial statements naturally it is
easy to have differences between one country’s GAAP and another country’s
GAAP and this makes things complicated for companies operating internationally
and they must hire accountants and finance staff specialized in the
accounting standards of all countries of operation that’s expensive and difficult
to coordinate this is why at some point the international accounting community
came to an agreement it would be best to come up with an international set of
rules that can be applied by all countries and produce a consistent and
easy-to-understand financial reporting the entity which was formed to create
these standards is called the International Accounting standard board
and the product of its work are the international financial reporting
standards abbreviated IFRS the IFRS standards have been adopted by many
countries around the world in the European Union IFRS standards are
required for all domestic public companies and for all companies on
European Stock Exchange’s small and medium enterprises do not have to use
IFRS and can report using local GAAP the u.s. is still considering the adoption
of the IFRS and allows their application by foreign companies in the u.s.
discussions with the IASB have lasted more than a decade and it has been
agreed that US GAAP and IFRS should converge at some point however the final
steps towards such unification of Accounting Standards have not been taken
and US companies continue to prepare their reporting under US GAAP okay in
this course we will try to provide both effectives we will talk about both IFRS
and US GAAP the fundamental principles we will study do not change under the
IFRS and US GAAP it is the mechanics of how things are accounted for that
changes but that’s important too isn’t it don’t worry we’ll stay on top of
things