GLOBAL

Global GAAP



Global GAAP

Introduction

The article presented by Crump (2012) shows that United States is not going to adopt International Financial Reporting Standards in the upcoming years. This was said by Gregory Anton the Chairman of the board of directors of American Institute of Certified Public Accountants. He said this in the conference of EDGE which was held in Orlando, Florida. In this conferences it was saw said that delegates should not expect any change in the reporting standards until the elections of presidents are held (CCAB 1998).

AICPA is supporting many companies of United States in using IFRS but it will take a long time to implement IFRS in all the companies of United. They are not finding any recommendation for moving from global generally accepted accounting principles. In short the article says that United States is not agreeing to implement international financial reporting standards in their country. On the other hand United Kingdom is recently moving towards international financial reporting system. The response of adopting IFRS in United Kingdome and reasons behind dropping GAAP will be discussed in details in this paper. This report will also look that global GAAP must be followed in United Kingdome or not and what are the reasons behind it. In order to understand these things it is important to first know that what are GAAP and IFRS. Then the discussion on the desirability and feasibility of GAAP in United Kingdome will be discussed (CCAB 1998).

Global Generally Accepted Accounting Principles

GAAP is the body of regulations which was established in United Kingdome by which companies should prepare their accounts. GAPP does not only include accounting standards they also have company laws of United Kingdome. It is a legal term in taxes acts of United Kingdom. Accounting standards are made by various sources. Financial reporting system was used to be settled by Accounting Standard Board. Then Accounting Standard Board was replaced by the Financial Reporting Council. It was banned in 1990 because of high amount of criticism on the work of this committee (CGAA 2002).

GAAP is a standard which guide companies and corporations in maintaining their accounting statements like assets and liabilities, revenue and expenses and many other financial statements. There are many accounting rules in GAAP which are used for various accounting transactions. GAAP is replaced by many countries these days. Countries prefer International Financial Reporting Standards instead of GAAP. There is difference between the GAAP applied in United States and GAAP applied in United Kingdom. Because of the difference in GAAP and international standards a user might take the information in wrong way (CGAA 2002).

The example of this can be taken as a user while looking at two companies might understand that one company is making more profit then another one. The fact is that the company is not making more profit. The profits are calculated in different ways due to which it looks like this. One of the reasons for moving towards international standards is that companies want avoid this kind of disparity (CGAA ...