COMPARATIVE ANALYSIS OF IFRS AND GAAP ACCOUNTING STANDARDS

Abstract

The globalization of capital markets has increased the need for harmonization of accounting standards. This is important for ensuring transparency, accuracy and investor confidence. Two of the most common accounting standards today are International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Practices (GAAP). While both serve to standardize reporting, there are important differences in the structure of the document and additional features. IFRS (administered by the International Accounting Standards Board - IASB) applies the principle of good health. That is, it pays more attention to content than form - it seeks to present the situation realistically. GAAP (administered by the Financial Reporting Standards Board - FASB) is a rule-based system with many control rules and exceptions. It clearly defines how companies should report. This article examines the similarities and differences between IFRS (International Financial Reporting Standards) and GAAP (Generally Accepted Accounting Principles) in depth in several key areas. These areas include: Revenue recognition, Asset valuation, Inventory methods, Lease accounting, Approach to financial instruments. The article also examines the conceptual framework that governs each system. It shows that IFRS focuses more on economic reality, while GAAP focuses on legal form and reliability. It also examines how these differences affect the financial reporting of businesses.