gaap_vs_ifrs - fr Cf we#l rl rgf 554 il i t/i a a'cfw[t,l/n...

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,***, ', fr Cf we#l rl rgf il i t/i,) a a''{' [t,l/n filw e",i il,",,,y. V Chapter 11 lnternational Financial Reporting Standards V 554 GAAP HIERARCHY-U.S. VERSUS IFRS ln discussions betweenthe FASB and IASB on developing a joint conceptual lramework, the lirst issue debated was whether the obiective should be to provide intormation to a wide range ol usets or only to existing shareholders. They agreed that information should be provided to all users making risky investmenls. GAAP Hierarchy refers to how an entity identifies the sources of accounting princi- ples and the franrework for selecting the principles used in preparing financial statements. The objective of the GAAP hierarchy is to pror-ide a consistent frame- rvork for selecting accounting principles to be used in preparing- financial state- ments that are presented in conformiq' with U.S. generally accepted accounting principles. Generally, the hierarchy contains multiple levels with the highest level given the most weight. Most standard setters have a stated hierarchy to guide pre- parers of the financial statements. On fune 30, 2009, the FASB issued its final statement in therSE S series: SE4S No. 158, The I1,SB Accounting Standarcls Cod.ificationrM and the Hierarchy of Generatll Accepted Accounting Principles-a replacement of FASB Statement No. 152. As of the effective date of this pronouncement (annual and interim periods ending after September 15, 2009), the FASB Accounting Standards Codification (ASC) became the source of authoritative accounting and reporting standards for non-govern- mental entities in the US. In essence this statement reduced the GAAP hierarchy to two levels: one that is authoritative (included in the FASB ASC) and one that is non-authoritative (not included in the FASB ASC). The exception would be all rules and interpretations issued by the SEC which are also sources of authorita- tive GAAP for SEC registrants. FASB Statement No. 168 is the final statement is- sued by the FASB in that form, and there will no longer be Emerging Issue Task Force (EITF) abstracts, staff bulletins, or AICPA Accounting Statement of Position. Instead FASB will issue Accounting Standards Updates. For exam- ple, liASB Statement No. 158 is referred to as Accounting Standards Update No. 2009-02. The codification includes approximately 90 topics on all accounting stan- dards from the previous hierarchy, as well as some relevant portions of se- lected SEC staff interpretations and guidance. (Keep in mind that the FASB ASC is not the authoritative source of SEC guidance.) The new codification should reduce the extent of time and effort needed to solve accounting reporting is- sues, provide accurate and timely updates as new standards are released, and clearly distinguish between what is and what is not authoritative. Finally, this chanee, if implemented and used as intended, should aid in the convergence with IFRS.
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This note was uploaded on 06/01/2011 for the course ACCT act3603 taught by Professor Passawan during the Spring '10 term at Assumption College.

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gaap_vs_ifrs - fr Cf we#l rl rgf 554 il i t/i a a'cfw[t,l/n...

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