Ifrs and Gaap ComparisonIFRS and GAAP ComparisonArnaldo ArroyoACC/290July 14th, 2015Eduardo de la CruzIFRS and GAAP ComparisonThe following are the questions and answers requested for week 5 IFRS to GAAP comparison. The paper is summarized and written in a simple question and answer format. In what ways does the format of a statement of financial of position under IFRS might be different than a balance sheet presented under GAAP?IFRS accounts do not have to be in order on the statement of financial position. Most times, companies will report the assets backwards in order of liquidity. For example, this is how an IFRS statement of financial of positions would look like: Long Term Assets, Current Assets, Shareholder Equity, Long Term Liabilities, and lastly Current Liabilities. GAAP requires the accounts to be in order based on the degree of liquidity. Cash is usually the first account reported, and non-current assets will be last account reported. This is an example of the order usually found on a GAAP balance sheet: Current Assets, Long Term Assets, Current
Liabilities, Long Term Liabilities, and lastly shareholder Equity. (Kimmel, Weygandt, Kieso. 2013)Do the IFRS and GAAP conceptual frameworks show a difference in terms of the objective of financial reporting? Explain.No, GAAP and IFRS have very similar views on the objectivity of financial data. Both will agree that financial reporting data should be relevant and faithfully represented. Relevant information is anything that may be considered useful to an investor, creditor, or regulator. Information that is being faithfully represented should be held to industry standards and any estimates should be conservative in nature. What terms used under IFRS are the same as with common stock and balance sheet?The Balance Sheet is the same as the “Statement of Financial Position”. Common Stock will typically labeled as “Share Capital Ordinary” on IFRS financial statements (Kimmel, Weygandt, Kieso. 2013).Describe some of the issues the SEC must consider in deciding whether the United States should adopt IFRS.
The Securities and Exchange Commission (SEC) and the U.S. Department of Labor (DOL), as well as the Commission of Justice, is taking strong positions on the requirements for the compliance of securities companies, particularly in compliance with the Common Stock Rule. This issue, as discussed earlier, is complex. The SEC can and should respond to any issues that may exist as they arise. The agency must weigh in on whether the use of certain instruments in various securities markets, such as securities securities, constitutes securities law violations. This should not deter SEC from implementing guidance or regulations based on financial information that could interfere with a company’s ability to achieve compliance by providing that information in a timely manner.
As discussed above, the CFTC may not be able to do everything and only can decide to enforce its own law. The FTC and DOJ may be able to take a different road and impose different rules on regulators. In general, the CITES should be held legally accountable. When the CFTC and the FTC decide, it will be important for the SEC and the public a clear understanding of what is actually needed and how to best enforce federal laws. Because certain types of information is in conflict with the requirements of the securities industry, even legal actions will be taken to enforce securities reporting requirements. While this may mean the FTC and DOJ taking an adversarial approach, it will also mean enforcement is a must for both.
Many people believe that the United States could become a global marketplace for the sale — or profit — of its securities. In some cases it might have some market power, but other things, such as the exchange market that could offer a more competitive price to individuals in trading and trade securities at different price points, could have significant market power over American consumers. This may be true, however, for certain aspects of the U.S. financial system. While some companies might own some U.S. securities in the United States, it is not the intent of the U.S. regulatory agency to regulate the entire U.S. securities market. An open exchange could also represent a market opportunity. Some experts say only open exchanges provide an incentive because it would be difficult to obtain government funding to invest in them. For that reason, open exchange participants in many markets, including the U.S., may be very small and could end up with less resources that would be available to regulators.
While there are many legal aspects of the U.S. financial system that should be taken into account when interpreting the U.S. securities law, the SEC does not have a monopoly on the provision of investment services to investors, or what is referred to through the terms “substantial investment account” and “substantial investment account.” Under the laws of international money markets or the United States securities market, the SEC could impose an intermediary duty on investments through any number of countries, for example those that are subject to U.S. obligations. When financial organizations seek to raise capital and purchase U.S. securities, they also have a duty to invest into investors who can prove their financial services. That means investment organizations should consider whether to take a risk by transferring the investment funds overseas or by trading, or even by simply selling the money and setting a low level of risk tolerance, as described in section 2530(B). For example, if an investor wants to buy a securities company (and subsequently sell these securities overseas) and want to make the transaction, the SEC should require that the investor pay a minimum of $1 million of the U.S. investment expense in order to receive the security. If the investor has not done this under the securities reporting rules in an appropriate country, then that investor is subject to a fiduciary obligation, which would be a financial transaction that could constitute misrepresentation. Other things that might be considered a risk, such as foreign debt instruments, are considered “substantial investment accounts.” Finally, investors who want