Introduction
Introduction Convergence continued to be a high priority on the agendas of both the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) (collectively, the Boards) in 2012. However, the convergence process is designed to address only the most significant differences and/or areas that the Boards have identified as having the greatest need for improvement. While the converged standards will be more similar, differences will continue to exist between US GAAP as promulgated by the FASB and International Financial Reporting Standards (IFRS) as promulgated by the IASB. In this guide, we provide an overview by accounting area of where the standards are similar and where differences exist. We believe that any discussion of this topic should not lose sight of the fact that the two sets of standards are generally more alike than different for most commonly encountered transactions, with IFRS being largely, but not entirely, grounded in the same basic principles as US GAAP. The general principles and conceptual framework are often the same or similar in both sets of standards, leading to similar accounting results. The existence of any differences — and their materiality to an entity’s financial statements — depends on a variety of specific factors, including the nature of the entity, the details of the transactions, interpretation of the more general IFRS principles, industry practices and accounting policy elections where US GAAP and IFRS offer a choice. This guide focuses on differences most commonly found in present practice and, when applicable, provides an overview of how and when those differences are expected to converge.
Key updates Our analysis generally reflects guidance effective in 2012 and finalized by the FASB and the IASB before 31 May 2012; however, we have not included differences related to IFRS 9, Financial Instruments, IFRS 10, Consolidated Financial Statements and IFRS 11, Joint Arrangements, except in our discussion of convergence. We will continue to update this publication periodically for new developments. *
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The Ernst & Young ―US GAAP-IFRS Differences Identifier Tool‖ provides a more in-depth review of differences between US GAAP and IFRS. The Identifier Tool was developed as a resource for companies that need to analyze the numerous accounting decisions and changes inherent in a conversion to IFRS. Conversion is of course more than just an accounting exercise, and identifying accounting differences is only the first step in the process. Successfully converting to IFRS also entails ongoing project management, systems and process change analysis, tax considerations and a review of all company agreements that are based on financial data and measures. Ernst & Young’s assurance, tax and advisory professionals are available to share their experiences and to assist companies in analyzing all aspects of the conversion process, from the earliest diagnostic stages through ultimate adoption of the international standards. To learn more about the Identifier Tool, please contact your local Ernst & Young professional.
November 2012 US GAAP versus IFRS The basics
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