Comparison between U.S. GAAP and International ... - Grant Thornton

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Comparison between U.S. GAAP and International Financial Reporting Standards 6 1. Introduction International standards and the IASB The International Accounting Standards Board (IASB) is responsible for the preparation and issuance of International Financial Reporting Standards (IFRS). Upon its inception in 2001, the IASB adopted the body of International Accounting Standards (IAS) issued by its predecessor, the International Accounting Standards Committee (IASC). The IFRS Interpretations Committee (IFRIC) assists the IASB in establishing and improving standards of financial accounting and reporting for the benefit of users, preparers, and auditors of financial statements. The IFRIC was established in 2002 when it replaced its predecessor the Standing Interpretations Committee (SIC). Under IFRS, when a standard or interpretation specifically applies to a transaction, other event or condition, the accounting policy or policies applied to that item is determined by applying the standard or interpretation and considering any relevant implementation guidance issued by the IASB. In this document, IFRS refers collectively to International Financial Reporting Standards issued by the IASB, International Accounting Standards issued by the IASC, and Interpretations issued by the IFRIC and the SIC. Financial accounting and reporting in the United States The Financial Accounting Standards Board (FASB) is the designated private sector body responsible for establishing and improving standards of financial accounting and reporting in the United States for nongovernmental public and private enterprises, including small businesses and not-for-profit organizations. Those standards, which govern the preparation of financial reports, are provided for the guidance and education of the public, including issuers, auditors and users of financial information. In certain cases, financial accounting and reporting requirements in the United States had been derived from U.S. Generally Accepted Auditing Standards (GAAS), as well as ethics requirements established by the American Institute of Certified Public Accountants (AICPA). The “AU” reference in this Comparison refers to GAAS promulgated by the AICPA. On July 1, 2009, the structure of U.S. GAAP changed dramatically with the launch of the FASB Accounting Standards Codification (Codification). On June 30, 2009, the FASB issued The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (Codification), to establish the Codification as the sole source of authoritative nongovernmental GAAP, except for SEC guidance. The Codification replaces the previous four-tiered U.S. GAAP hierarchy with a two-level hierarchy consisting only of authoritative and nonauthoritative guidance. The Codification does not create new accounting or reporting guidance. The FASB developed the Codification in response to constituents’ reported difficulties with applying guidance under the four-tiered GAAP hierarchy. To address those concerns, the FASB designed the Codification to simplify the application of U.S. GAAP by consolidating all authoritative guidance in a single document and by rewriting the guidance using a consistent organizational structure. The FASB launched the Codification after a one-year trial period during which constituents provided feedback. © 2011 Grant Thornton LLP All rights reserved U.S. member firm of Grant Thornton International Ltd
Comparison between U.S. GAAP and International Financial Reporting Standards 7 SEC registrants must also comply with U.S. Securities and Exchange Commission financial reporting requirements including those promulgated in SEC Regulations S-X and S-K, Financial Reporting Releases (FRR), and Staff Accounting Bulletins (SAB). The SABs represent practices followed by the staff in administering SEC disclosure requirements. IFRS and U.S. GAAP comparison This Comparison highlights some of the more significant U.S. GAAP and IFRS requirements as well as the major similarities and differences between current U.S. GAAP and IFRS. While not an exhaustive listing, we highlight some of the more significant differences between U.S. GAAP and IFRS that we believe are most commonly encountered in practice, which should assist those new to IFRS in gaining an appreciation of their major requirements and how these differ from requirements in the United States. Disclosure requirements are not addressed except in exceptional cases where those requirements constitute major differences between U.S. GAAP and IFRS. Companies reporting according to requirements established for the European Union comply with IFRS as adopted by the European Commission (EC). Those standards may differ from IFRS as issued by the IASB because of the timing or scope of endorsement by the EC. Other jurisdictions may have similar endorsementrelated differences. Such differences are not addressed in this document. This Comparison has been updated for standards issued through December 31, 2010. Effective dates for standards vary and are generally noted where relevant. This Comparison does not address industry-specific requirements for banks, other financial institutions, insurance companies, not-for-profit organizations, retirement benefit plans, extractive industries, or agriculture. In particular, the following IFRS pronouncements have not been included in the document due to their specialized nature: IFRS 4, Insurance Contracts IFRS 6, Exploration for and Evaluation of Mineral Resources IAS 26, Accounting and Reporting by Retirement Benefit Plans IAS 41, Agriculture Each year the IASB considers minor amendments to IFRS in an annual improvements project. The amendments represent non-urgent but necessary amendments to IFRS and are proposed each year in an omnibus Exposure Draft. The IASB has issued Annual Improvements for 2010 which are included in this Comparison where applicable. This Comparison also does not include IFRS standards that address first-time adoption of IFRS and IFRS for small and medium-sized entities: In November 2008, the IASB issued a revised IFRS 1, First-time Adoption of International Financial Reporting Standards, which is effective for reporting periods beginning on or after July 1, 2009 with earlier application permitted. IFRS 1 covers the application of IFRS in a company's first IFRS financial statements. It starts © 2011 Grant Thornton LLP All rights reserved U.S. member firm of Grant Thornton International Ltd
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Comparison between U.S. GAAP and International ... - Grant Thornton

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