Provide addition research for final course project accounting 525

Course Project Current Issues in Accounting, Auditing, or Tax Objective The objective of this project is for you to research a current issue in accounting, auditing, or tax that interests you in depth. The topic could be one that we will discuss in class, such as a specific topic within IFRS, XBRL, ethics, or another topic that you will find interesting. It is important that the topic be extensive enough that eight-to-ten pages can be written on it. Paper Outline Section Points Description Title Page 5 Introduction History 10 50 Current Status Future Conclusion References 50 50 15 20 Title of your research paper, your name, e-mail address, course number and title, instructor, and date. Provide an overview of the topic that you are researching. Present the history of the topic including what events led up to the topic coming into being. If applicable, present the history in multiple countries. Present the current status of the topic. Describe what you think the future of the topic will be. Present a conclusion to your topic. You must use no fewer than six library resources. All references must be cited in two places: within the body of your paper and on a separate reference list. Choose references judiciously and cite them accurately. Cite all sources using APA format. Do not use Wikipedia as a reference source. If you find useful information from Wikipedia, triangulate your research and find other, more credible source(s) which provide the same (or better) information, and then utilize the information from that more credible source in your paper and reference page/bibliography. Total 200 Research Sources 1. All papers must have a minimum of six scholarly sources cited within the text of the paper and identified in the references section. 2. Additional research sources can be attached in a bibliography. Paper Format 1. All papers should be single sided, double-spaced, and using a 12-point font. 2. Length of the paper should be between eight-to-ten pages, counting the cover page and bibliography. bd083bc79e3201716976441679377a4b09778078.docx Page 1 Course Project 3. The first page should include the title of the work, student name, course number, date, and instructor name. 4. Follow APA style for general format and citations. bd083bc79e3201716976441679377a4b09778078.docx Page 2 1 Running Head: Generally Accepted Accounting Principles Future of GAAP in IFRS ERA Francis Ikwueme Accounting 525 Professor: Ahmed Shaik 2 Generally Accepted Accounting Principles Definition GAAP are accounting principles and methodologies that provide defined guidelines in accounting for most companies during the preparation of financial statements. GAAP standards are drafted and regulated by the following boards; American institute of certified public accountants and financial accounting standard board. Cooperate accountants are guided by AAP rules and standards during the presentation of details that are associated with financial operations within a company. The details can be established in places such as income statements, annual reports for quarterly balanced sheets. Examples that can be used to measure non GAAP are gross income, net earnings and net cash. Overview Investors are required to look at a company's GAAP financial results, as a method of standardization this will provide reliable means that can be used to compare financial statements from one company to the other in a given period of time. Although rules that are used in GAAP are sometimes interpr4eted differently, and companies that are unscrupulous find alternatives of manipulating the standards to come up with what fits them most for their personal advantage. In most cases the appropriate way used by several accountants to compare a company's performance is through reviewing non GAAP measures against the previous periods. Investors, managements and accountants use these measures to gauge the performance in a company. GAAP standards have got three principles that affect all financial statements. These are options in the reporting periods, monetary units required in financial reporting and lately a going concern assumption. The financial data that is established should convey monetary system used in the United States and also inclusion of transactions is a very important aspect. The three 3 Generally Accepted Accounting Principles assumptions are normally used to by businesses to defer certain expenses that are prepaid and as a result wait for future periods in accounting. Accrual basic accounting is used in GAAP guidelines to ensure that its functions with the existing guidelines. Accrual accounting includes reporting of revenues and expenses in regard to sales made in a partly period of time regardless of the period that money has been received, For instance credit sales are considered as sales revenue in respect to when the sales were made during financial reporting although the business will receive that money after some period of time. GAAP principles of cost demands financial statements to issue reports on capitals assets in regard to the purchases made originally, it doesn't provide allowances, inflation and appreciation of an asset and as a result the reported amounts are called historic cost accounts. History United States is one of the countries that applies GAAP principles up to date although other countries have used GAAP guidelines in the past years most of the have integrated and conformed to other accounting standards such as IFRS, for that matter am going to major on US GAAP (Komai, 2014). In 1929, there was a crush in stock market; the United States government looked for alternatives that could be used in regulating practices used by public trading companies and other major participants in the market. Exchange commissions and securities were given the opportunity to set standards that could be used in accounting practices. The Securities and Exchange Commission gave this mandate to private sector audit community to set the standards. In 1939, an accounting procedure was established by the American Institute of Accountants. 20 years later the accounting principle board replaced CAP and APB started to 4 Generally Accepted Accounting Principles issue options regarding major topics in accounting that were supposed to be adopted by companies that take part in business and accountants were given the mandate to adhere to them. In 1973, financial accounting standard board rose as a result of APB. FASB has been used as the main body that regulates policies in regard to accounting practises. Their decisions normally influence governmental and nongovernmental organizations since they have the responsibility for giving out options and judgments. The principles that had been passed down by FASB and APB have been used to establish GAAP (Komai, 2014). GAAP is used to provide guidelines and objectives for financial statements and give reports on the calculations inside the limits set up by GAAP, auditors have the mandate of establishing uniformity among financial reports of companies that engage in public trade, and however there are private companies that use GAAP guidelines. It is easier for investors to understand and interpret financial progress when they use GAAP guidelines. Regulators, cooperate managers and the accounting society benefit from the necessary support that this uniformity provides. Countries such as Germany, French, austral and Dutch also use GAAP. GAAP was codified in these countries in the year 1937 in a stock cooperation law; this was as a result of huge companies that ran bankrupt during the period of world war that led to economic crisis in the period between 1920 to early 1930's. In 1937 a comprehensive modification of stock cooperate laws was enacted and the dominant principle used by the above countries in accounting was GAAP. Current status Currently, GAAP covers four major accounting principles; basic principles and guidelines in accounting, cost, revenue and matching principle. 5 Generally Accepted Accounting Principles Basic principles and guidelines in accounting, this are guidelines set for accountants to follow, although there doesn't exist comprehensive list of the accounting principles, accountants in various firms are required to general consensus in regard to accounting principles that ensures that a uniform level of accounting professionalism and quality is established. There are also QuickBooks that are used by accountants and business owners to enable them follow necessary tools required by GAAP. Basic principles in accounting are used solve problems that exist financial reports for instance recording expenses and income generated in a business, there are principles that provide clarity on the time that revenue is supposed to recorded and some state the moment that profit in an investment should be recorded hence enabling investors to identify how the money has been used. The cost principle refers to information from accounting that is based on the factual cost (Chiappetta, 2009). All products are treated as valuable in regard to the payment offered. GAAP measures cost as the value of cash from business entities. For instance if you purchase an item an get a huge deal such as seven thousand dollars instead of five thousand dollars, the accounting information will recognize the item that is has the value of five thousand dollar to ensure that accounting objectives are maintained. Revenue principle is used to distinguish when a firm should record revenue (Chiappetta, 2009). Revenue is established when it s earned meaning that revenue can only be recorded after sales of goods and services. This principle is used to ensure that companies don't recognize revenue earlier or later so as to ensure appropriate profits is made. 6 Generally Accepted Accounting Principles The matching principle refers to reports that a company should make on expenses in a particular period of time from the revenue reports that have been generated, for instance when a firm purchases raw materials worth twenty pounds and it uses the raw materials in making twenty widgets and in that case sells them at five each, the remaining fifteen will be accommodated as inventory. The public independent boards are used in determining and maintaining GAAP, although public companies are required by the federal government to compile with GAAP principles they cannot regulate the principles. Independent boards also update business on the changes that take place in financial changes due to the evolutionary nature of the global economy. For instance interest rate swap interests is one of the adopted recent changes that provides alternates for the private sector. In the United States all fifty states are required to prepare financial reporting's that comply with GAAP, although local governments aren't officially required to adhere to this conformation (Christensen, 2017). GAAP commands a total of seventy percent of the local financial officers and county's finances. GAAP is extremely valuable since it endeavors to institutionalize and control bookkeeping definitions, suppositions, and techniques. Due to proper accounting rules we can expect that there is consistency from year to another in the strategies used to set up an organization's budgetary explanations. Furthermore, despite the fact that varieties may exist, we can make sensibly sure conclusions when contrasting one organization with another, or contrasting one organization's budgetary insights with the measurements for its industry. 7 Generally Accepted Accounting Principles Throughout the years the proper accounting rules have turned out to be more perplexing in light of the fact that money related exchanges have turned out to be more unpredictable. Future of GAAP Current events that take place in the economy indicate what the world's economy rely on and for that matter most companies across the world have adopted financial reports that comply to the world's standards apart from the united states. The world's set standards are referred to as IFRS. In future the United States and other countries using GAAP have to switch to IFRS for the purpose of comparing financial statements across the globe (Gordon, 2017). Another favor that US and other governments will benefit from the shift is that IFRS is very simple unlike GAAP which is very complex since it contained a lot of rules that are difficult to navigate in a dynamic business structure. IFRS is more standards based, permitting those who prepare financial information to come up with appropriate conclusions while applying the standards according to the prevailing circumstance (Lazarides, 2010). Finally, institutions that set standards for accounting are more likely to adopt IFRS to ensure that the US perspective is properly represented. I trust the change to IFRS will inevitably occur in the United States. Generally, the shift from GAAP to IFRS will have no negative effect to financial reporting in the United States for most companies. However, due to the differences that the two accounting principles have the transition period requires combined tax force to enable them report appropriately. The consequences of the move from GAAP to IFRS will depend on several factors such as complexity and size of an entity due to these differences in measurements will arise that can result to higher taxation (Winney, 2010).The potential changes and measurement differences in 8 Generally Accepted Accounting Principles the presentations of balance sheets can result to an interruption in the banking covenant hence renegotiating existing arrangements is required. Conclusion The establishment of GAAP ensures that investors, regulators and creditors have the mandate of drawing appropriate conclusion in terms of the quality that a company can offer or investing the financial status of a business. This ensures that data is collected in an appropriate manner. The principles and regulations that are used in GAAP provide consistencies when it comes to financial preparation and reporting. Despite these advantages most countries have shifted to IFRS due to its convenient nature. Typically, there are several problems that arise during financial problems over a period of time since new methods regarding financial events can be created that are sometimes not covered in us GAAP hence resulting to weaknesses in GAAP guidelines. Due to such concerns the US is mandated to establish FASB to provide alternative rules and provide new amendments structures. References Chiappetta, B., Shaw, K., Wild, J. (2009). Principles of Financial Accounting (19th ed.). McGraw-Hill/Irwin. 9 Generally Accepted Accounting Principles Christensen, H. B., & Nikolaev, V. V. (2017). Contracting on GAAP changes: large sample evidence. Journal of Accounting Research. Gordon, E. A., & Hsu, H. T. (2017). Tangible Long-Lived Asset Impairments and Future Operating Cash Flows under US GAAP and IFRS. The Accounting Review. Komai, A., & Richardson, G. (2014). A history of financial regulation in the USA from the beginning until today: 1789 to 2011. Handbook of Financial Data and Risk Information. Lazarides, T., & Drimpetas, E. (2010). Corporate governance regulatory convergence: a remedy for the wrong problem. International Journal of Law and Management, 52(3), 182-192. Winney, K., Marshall, D., Bender, B., & Swiger, J. (2010). Accounting globalization: roadblocks to IFRS adoption in the United States. Global Review of Accounting and Finance, 1(1), 167-178