GAAP vs. IFRS
Compare accounting standards from two prominent organizations: Financial Accounting Standards Board (FASB) in the United States and International Accounting Standards Committee (IASC) in Europe. GAAP, or Generally Accepted Accounting Principles, is a set of rules established by FASB for financial reporting in the US, emphasizing conservatism and historical cost accounting. IFRS, or International Financial Reporting Standards, is issued by IASC and adopted globally, focusing on principles-based approach with more flexibility and less rigid adherence to specific numbers. Key differences exist between GAAP and IFRS, including treatment of intangible assets, revenue recognition, and lease accounting, among others. As a result, companies listed or operating in multiple countries must comply with both standards, often necessitating reconciliations and adjustments to financial statements.