Accounting (International Financial Reporting) Research Paper

Accounting (International Financial Reporting) - Research Paper Example Up to three members may be part time members. After 2 July 2009, IASB members are appointed for an initial term of five years, renewable for further three years.† (IFRSs in your pocket, 2010) Business firm can present its financial statement in the same format as their counterparts in other countries. It makes comparisons easier. This is especially useful for the investors to make investment decisions. The basic difference between GAAP and IFRS is that GAAP is a rule based accounting system and on the other sense IFRS is principle based system. In rule based accounting like GAAP, one needs to follow the rules specified for each of the business transaction while recording the transaction in accounts. Sometimes, the accountant foresees the effects of the accounting transaction on the end result and tends to interpret the rules with the objective of presenting good numbers to the public. Many scandals including Enron depict the loopholes in the present GAAP system which lacks a transparent system. In IFRS, a principle based accounting systems, which records the transaction in a transparent manner, which shows the true nature of each transaction. Also the consolidation of accounting concepts like IFRS makes the comparison of financial reports easier for the investor community. The transparency provided by IFRS help will them to make wise investment decisions. Mirza, A., Holt, G., & Orrel, M (2010). International Financial Reporting Standers (IFRS) Work Book. John wely and sons. Retrieved November 30, 2010, from