Are there Accounting Guidelines I should Know about?
The GAAP and IFRS are guidelines for reporting financial information. The Generally Accepted Accounting Principles (GAAP) apply to US businesses. The Financial Accounting Standards Board (FASB) includes GAAP in the published information about the standards of financial accounting. The FASB is recognized as the US accounting authority by the Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants (AICPA). The International Financial Reporting Standards (IFRS) are global accounting standards that were established by the International Accounting Standards Board (IASB).
Accountants are responsible for the information that is reported on financial statements, which must comply with different regulations for each country. The financial information is usually organized with accounting software, such as QuickBooks or Access. The software is designed to accommodate most business requirements for recording journal entries, maintaining ledger accounts and for preparing financial statements. However, the accountants must choose the appropriate methods to use for categorizing and reporting amounts on US financial statements, such as for revenue with the Completed Contract Method or Cost-Recovery Method.
The United States has not adopted the IFRS, which were developed to establish global uniformity for accounting methods. The IASB was preceded by the International Accounting Standards Committee (IASC). The previous accounting guidelines were the International Accounting Standards (IAS) that were established by the IASC. There are some similarities between the GAAP and the IFRS. The SEC has decided to accept some financial statements that were prepared with the IFRS. However, the US authority for accounting standards is the FASB.
Many companies have global operations and submit various forms of financial statements that must comply with the regulations for different countries. The United States has a Form 10-K, which includes information about international companies. The form has a section for the reported amounts from other countries, which have been converted into amounts or percentages that reflect US dollar amounts. The information reflects the foreign exchange rate that was applicable on the date of the financial statements.