Senior Seminar in Accounting – 4501
CANVAS ASSIGNMENT INSTRUCTIONS (GAAP-IFRS CASE)
As you may be aware, there are currently two major bodies governing accounting – the FASB and the IASB. Companies in the United States are required to report their financial results in accordance with Generally Accepted Accounting Principles (GAAP). Over 120 countries around the world report in accordance with IFRS (International Financial Reporting Standards) or some approximation thereof. The SEC (Securities and Exchange Commission) has final responsibility for overseeing the convergence of these accounting methodologies in the United States. In general, it is said that GAAP is more rules based and that IFRS is more principles based. Adherence to one standard or the other results in financial statements that can differ significantly in their presentation. The Canvas site has a synopsis (prepared by several of the major accounting firms) of some of the remaining significant differences between GAAP and IFRS.
Your firm has asked you to examine a client’s financial statements and to make a recommendation for the appropriate treatment to convert them from GAAP to IFRS. The client is seeking financing from an international bank and they require the statements to be reported under IFRS. The firm has assigned teams to review various areas that may be impacted. The partner-in-charge has directed you to select a specific area that you’ll be researching.
Your assignment is to write a four page executive briefing memo to provide guidance on what changes will be required to convert the statements from GAAP to IFRS for the item you’ve selected. You may choose any topic from the resources provided or other sources you find. However, you may not use inventory or any issue related to inventory for your topic.
Your memo should cover the following:
- Open your paper with a brief statement on the nature of this engagement.
- Follow with a general discussion of the specific area you’ll be addressing so that the client (who is familiar with IFRS-GAAP issues) can understand the specific issue to be discussed in the paper.
- Discuss the current treatment under GAAP and cite the appropriate codification that governs the treatment of the item.
- Discuss the treatment required under IFRS and cite the appropriate codification that governs the treatment of the item.
- Discuss the change that will be required to convert the statements from GAAP to IFRS. Be specific with respect to adjustments required, if any, to the balance sheet and/or the income statement, statement of cash flows, financial disclosures, etc.
- Provide a clear and concise example of how the item is currently presented (under GAAP).
- Provide a clear and concise example of the change that will be required to convert the statements from GAAP to IFRS.
- Provide a general statement on the impact, if any, to analytical measures used to commonly assess liquidity, profitability, solvency, etc.
- Provide a short conclusion that ties the paper together.
- Be sure to clearly identify jargon (terminology) that you use in your paper.
Your paper should:
- Have no references to the term convergence.
- Stay focused on a specific GAAP-IFRS issue
- Only reference FASB and IASB codifications. DO NOT cite Investopedia, accounting firms, textbooks, etc.
- Be grammatically correct – NO: misspelled words, incorrect word usage, run-on sentences, poorly constructed sentences, confusing terminology, etc.