ich have been adopted by the International Accounting Standards Board and comprise of IFRS, IAS (International Accounting Standards) and Interpretations.
The term GAAP refers to the Generally Accepted Accounting Principles used by the CPA firms and companies in order to present their financial statements. These are also referred as the rule-based accounting standards.
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are jointly functioning in numerous cooperative assignments intended to enhance the compatibility of US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), and eventually converge both the standards with each other. (PWC)
The convergence of IFRS and the GAAP will largely impact the public companies, accounting firms, and small and medium companies together. The affects which the convergence will have are discussed in detail below.
The public companies will be largely affected as the convergence will alter the reporting requirements of the companies and greater disclosures will be required as per the disclosure requirements if IFRS. The convergence will also have impact on the revenue recognition as the IFRS provides a different and assorted way of treating revenues from different transactions. This convergence will also impact the banking industry with regards to computation and accounting of gain, impairment of financial assets and hedging etc.
This convergence will give new dimensions to the work of the accounting firms as they will have to reassess the reporting requirements and the financial disclosures for which they have to give their opinion. CPAs as well as the accounting firms will be required to obtain considerable knowledge and training to cope up with the converged standards in line to make the move while educating their clients as well. (Convergence Is Coming: How Your CPA Firm Should Prepare )