What is the International Organization of Securities Commissions (IOSCO)
Although the IFRS and GAAP frameworks are different, they usually agree in the overall structure and principle and are working toward convergence. The two differ in the following ways:
• IFRS requires users to consider the general principles in the absence of specific standards.
• US GAAP distinguishes between objectives for business and non-business entities.
• The IASB framework gives more emphasis to the importance of the accrual and going concern assumptions than FASB
• GAAP framework establish a hierarchy of qualitative financial statement characteristics;
• Some differences in how each defines, recognizes, and measures individual elements of financial statements
• Companies reporting under standards other than GAAP that trade in USA must reconcile their statements with GAAP.
The International Accounting Standard Board (IASB)
The IASB structure's main features are:
- the IASC Foundation - which is an independent organization whose two main bodies are the Trustees and the IASB
- a Standards Advisory Council
- the International Financial Reporting Interpretations Committee
The IASC Foundation Trustees appoint the IASB members, exercise oversight and raise the funds needed, but the IASB has sole responsibility for setting accounting standards. This organization was created to set international accounting standards in an effort to bridge the gap between the accounting standards of different nations.
- Dividends paid by a company to its shareholders are classified on the cash flow statement under cash flow from financing.
- The dividends received by a company from its investments are classified as cash flow from operations.
- All interests received and paid by or to a company are classified as cash flow from operations.
Under IAS GAAP:
- Dividends paid by a company to its shareholders, dividends received by a company from its investments and all interests received and paid by or to a company can be classified as either cash flow from financing or cash flow from operations.
These rules are summarized in the following chart:
|U.S. GAAP||IAS GAAP|
|Dividends paid by a company to shareholders||Cash Flow from Financing||Cash Flow from Financing or Operations|
|Dividends received by a company from investments||Cash Flow from Operations||Cash Flow from Financing or Operations|
|All interest received and paid by or to a company||Cash Flow from Operations||Cash Flow from Financing or Operations|
It is highly likely you will need to calculate a figure on a cash flow statement according to one of the two rules.
InvestingThe convergence of accounting standards is changing the attitudes of CPAs and CFOs toward harmonization of international accounting.
InvestingDifferences between accrual accounting and cash flows show why net income is easier to manipulate.
InvestingThe financing activity in the cash flow statement measures the flow of cash between a firm and its owners and creditors.
InvestingPressure to be the best can sometimes push corporations to cheat. Learn how they do it and how to spot it.
InvestingFind out how to analyze the way a company spends its money to determine whether there will be any money left for investors.
InvestingExamine the divergence of GAAP and adjusted earnings in the years leading up to 2015 to identify the factors causing the gap to widen.
InvestingCash flow analysis is a critical process for both companies and investors. Find out what you need to know about it.
InvestingThe metrics for the Statement of Cash Flows is best viewed over time.
InvestingCash flow from financing activities is typically the third and final section of the statement of cash flows. It shows changes to cash resulting from activities such as issuing stocks and bonds ...