1.
International Financial
Reporting Standards
(IFRS)

2.
 Generally Accepted Accounting Principles (GAAP) refer to a
common set of accounting rules, standards, and procedures
issued by the Financial Accounting Standards Board (FASB).
 Public companies in the U.S. must follow GAAP when their
accountants compile their financial statements.
 International Financial Reporting Standards (IFRS) are a set of
accounting principles for the financial statements of public
companies that are intended to make them consistent,
transparent, and easily comparable around the world.
 Applied in almost 120 countries except USA.
IFRS (Principles-Based Accounting)
vs. US GAAP (Rules-Based Accounting)

3.
IFRS (Principles-Based Accounting)
vs. US GAAP (Rules-Based Accounting)

4.
Key Differences between IFRS vs. US GAAP
1. Treatment of inventory
 IFRS – LIFO (Last In First Out) is not allowed
 GAAP – LIFO or FIFO (First In First Out) is allowed.
2. Intangibles
 IFRS – costs in the research phase are expensed as incurred
 US GAAP – generally requires immediate expensing of both research and
development expenditures
3. Rules vs. Principles
 GAAP – Rules and Procedures
 IFRS – Principles
4. Recognition of revenue
 GAAP – revenue is not recognized until the exchange of a good or service
has been completed
 IFRS – revenue is recognized when the value is delivered.
5. Classification of liabilities
 GAAP – liabilities are classified into either current or non-current liabilities.
 IFRS – no plain distinction between liabilities in IFRS

5.
US Public Company use GAAP
 SEC / Government
International/Global companies use IFRS
 Non-profit organizations
US has started to accept IFRS reports
 On-going efforts to bridge the gap
Who Uses GAAP vs. IFRS

6.
History
Stock Market Crash of 1929 and the subsequent Great
Depression
Securities Exchange Act of 1934
Harmonize accounting across the European Union
The IAS were issued between 1973 and 2001 by
the Board of the International Accounting
Standards Committee (IASC).

7.
Present and Future
US GAAP
Still required for US companies
IFRS
IFRS currently has complete profiles for 166
jurisdictions including those in the European Union

8.
THANK YOU

9.
Bragg, S. M. GAAP Implementation Guide; John Wiley & Sons: Hoboken, N.J.,
2004
Bragg, S. M. The Ultimate Accountants' Reference : Including Gaap, Irs and Sec
Regulations, Leases, and More, 3rd ed.; Wiley: Hoboken, N.J., 2010.
Media, B. P. P. L. IFRS Explained : A Guide to International Financial Reporting
Standards; Explained; BPP Learning Media: London, 2012.
Garvin, M. GAAP vs. IFRS: What's the difference?: HBS Online. Business Insights
Blog. (2019August 30). Retrieved May 23, 2022, from https://online.hbs.edu/blog/p
ost/gaap-vs-ifrs .
References