Comparison between U.S. GAAP and IFRS Standards

Over 120 countries currently require or permit the use of IFRS® Standards. Although public entities in the United States are required to apply U.S. GAAP, the Securities and Exchange Commission (SEC) continues to explore whether, and if so, when and how to incorporate IFRS Standards into the U.S. financial reporting system.

The SEC staff is discussing with the SEC Commissioners a potential path to allow domestic registrants to provide, in addition to U.S. GAAP financial statements, supplemental IFRS Standards financial information with reconciliation to U.S. GAAP. The SEC staff’s current thinking is not to require the supplemental information to be a complete set of financial statements prepared in accordance with IFRS Standards or to require such information to be audited. The SEC also continues to urge the FASB and the International Accounting Standards Board (the Board) to maintain their commitment to collaboration in support of the objective of a single set of high-quality, globally accepted accounting standards.

While the SEC has accepted the financial statements of foreign private issuers prepared using IFRS Standards as issued by the Board for several years now, and despite the SEC’s Work Plan regarding the potential use of IFRS Standards by domestic issuers, a difference in reporting requirements for these two groups of registrants remains, with no timeline for bridging this gap. Standard setters and regulators continue to emphasize the value of converged accounting standards, citing the recently issued revenue recognition standard as an example of convergence at work. However, consistency and comparability of published financial results for domestic versus foreign private issuers remains a topic of discussion.

Even though the SEC has delayed making a final decision, many observers still believe that the U.S. capital markets eventually will incorporate IFRS Standards into the U.S. financial reporting system in some manner. In the meantime, it is incumbent on preparers, auditors, and regulators to be aware of the differences that currently exist between IFRS Standards and U.S. GAAP.

We have prepared the Comparison between U.S. GAAP and IFRS® Standards (Comparison) to help readers grasp some of the major similarities and differences between IFRS Standards and U.S. GAAP. More emphasis is placed on recognition, measurement, and presentation guidelines, and less emphasis is placed on disclosure requirements. As more fully explained in Section 1, “Introduction,” this Comparison covers only those differences that we believe are most commonly encountered in practice.

The Comparison includes standards issued as of September 2016. Recently issued guidance included in this Comparison but that is not yet effective has been shaded in the tables below for those entities that may wish to early adopt the guidance, if permitted. We have included Appendices that list the titles of all IFRS Standards and U.S. GAAP standards, as well as SEC rules, regulations, and practices, that are referred to in this document.

The Comparison is written by the Accounting Principles Consulting Group of Grant Thornton LLP. The contributors are Sheri Fabian, Partner and Helen Bachman, Managing Director.

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