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Difference Between GAAP and IFRS Certification

Difference Between GAAP and IFRS Certification

Accounting is considered to be the business language in modern-day operations. With rightful accounting, a company will be able to maintain subtle financial health and improve its potential over time. Moreover, accounting experts within a company will help the business earn profit in new investment opportunities. 

There are two standards being followed by the companies to record transactions and create financial reports. The standards are IFRS and GAAP. Both have their own significance and importance, and this article intends to explain to you the difference to help you understand why people are preferring IFRS certification course

Know about GAAP and IFRS

Accounting standards are pretty much important for any company to narrate financial information. It helps them prepare statements with accuracy to compare them and utilize them for the betterment of organization. The two sets of business acceptable finance standards are GAAP and IFRS. 

GAAP (Generally Accepted Accounting Principles) is also known as US GAAP, and is a set of guidelines imposed by FASB (Financial Accounting Standards Board). It is mostly followed by major companies in the US. IFRS (International Financial Reporting Standards), on the other hand, are principles that are dictated by IASB (International Accounting Standards Board). These reporting standards are followed not just in the US but also in many countries and companies outside of US and all over the world. 

Deciding the type of acceptable standards, depends upon your company. If your company operates only in the US, then it might use GAAP, but if it operates internationally, then IFRS is the feasible option. Moreover, the IFRS course duration is also less, that allows individuals to take up this certification and join proficient companies internationally.

Differences Between IFRS and GAAP

To help you understand the difference between GAAP and IFRS, here are some of the focused distinguishing factors:

  1. Balance Sheet- The balance sheet of GAAP is different than that of IFRS. GAAP sheets have their current assets listed primarily first, whereas the IFRS sheets begin with non-current assets. 
  2. Cash Flow Statement- The cash flow statement prepared within the companies is different for GAAP & IFRS. The major differences are observed on dividends and interest classification. IFRS allows the companies to choose their own interest classifying policies, whereas GAAP prescribes that interest received and paid are classified to be the operating activities. 
  3. Asset Revaluation- GAAP doesn’t allow writing back an asset value after it has been impaired. But, IFRS permits this facility of revaluation of certain assets to the original cost with a scope of adjustment for depreciation. 
  4. Inventory Valuation Methods- GAAP & IFRA vary in their inventory valuation handling aspects as well. FIFO, LIFO & Weighted Inventory, are three methods using which the companies value their inventory. GAAP in US permits all of these inventory valuation methods, but IFRS allows only weighted inventory and FIFO methods for the purpose, and not LIFO. 

Conclusion

These are few of the things that explains the difference between GAAP and IFRS standards. You just need to ensure that your company is following the right reporting standards that meets the company’s requirements and norms. Financial statements are inevitable necessities of a company, that gives insight into the company’s performance. And, therefore, it is important for companies to decide on their acceptable standard. Individuals are also turning up for IFRS certification course to seek high paying job roles. 

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