Ifrs Convergence

In: Business and Management

Submitted By treasuretrader
Words 2220
Pages 9
Introduction While United States Generally Accepted Accounting Principles (U.S. GAAP) are required throughout the United States, other countries utilize other methods of classifying their financial statement items. While the standards of accounting differ among many countries, there has recently been an effort to attain a universal set of standards under International Financial Reporting Standards (IFRS). While this has not yet been achieved, multiple countries have made an effort to converge their standards with IFRS. This paper attempts to illustrate the diversity that currently exists throughout the accounting world, briefly comparing several key differences of U.S. GAAP to the standards used in Hong Kong, China, Mexico, and the United Kingdom.
Hong Kong
With a few minor exceptions, Hong Kong has officially converged its financial reporting standards with IFRS effective January 1, 2005 (AdoptIFRS.org). Hong Kong’s primary GAAP-required statements are known as Hong Kong Financial Reporting Standards (HKFRSs), including their interpretations (Deloitte Global Services Limited, 2013). Other mandated GAAP requirements are found in Hong Kong’s Companies Ordinance as well as its Listing Rules (Deloitte Global Services Limited, 2013). The following paragraphs briefly highlight key financial statement items and their differing treatments by Hong Kong under IFRS and U.S. GAAP.
The Balance Sheet
While U.S. GAAP only provides a small amount of direction when clarifying how assets and liabilities should be offset, IFRS gives specific directions on how to offset both assets and liabilities (Epstein, Ifrs statement of financial position, 2012). Additionally, U.S. GAAP does not call for a classified statement of financial position, while IFRS requires one (Epstein, Ifrs statement of financial position, 2012). However, the terms “current” and “noncurrent” vary slightly…...

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