Accounting Principles And Financial Statements Essay

1315 Words Oct 29th, 2015 6 Pages
In the present years, there has been raised the debate on the conversion of GAAP (Generally Accepted Accounting Principles) to IFRS (International Financial Reporting Standards). Companies, especially in the United States of America, are using a system of inconsistent accounting standards for their financial reporting. That is why FASB encourages most organizations moving to a universal system of reporting. However, the transition affects the financial data, financial compliance controls, financial reporting procedures, performance management networks, training programs and the financial disclosures. This memo seeks to address the issue of disclosure of contingencies, and our company will need to change some particulars in their struggle to present their financial statements under IFRS.
Unlike in GAAP, the IFRS, which is based on principles, may require firms to provide further explanations on their assets, debts and other elements. This will offer potential creditors and investors enough information, and help them understand our financial statements better. For instance, the notes will require to be elaborated further in the transition from GAAP to IFRS. Any legal implications of notes disclosure should be considered.
How Disclosures are Treated under GAAP
GAAP treats disclosure of contingencies losses using a codification, which called ASC 450. While FASB has been attempting to drive changes, letters from various interested parties have always derailed their efforts.…

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