Question

What are the two main financial reporting standards currently being used by companies? Do all companies have to use these financial reporting standards?

APA Format, 4 cited sources

Answer 1

The two main financial reporting standards currently being used by companies in the USA are

Generally Accepted Accounting Principles(GAAP or US GAAP) framed & published by the Financial Accounting Standards Board(FASB of the USA)

and the

International Financial Reporting Standards (IFRS)framed & published by the International Accounting Standards Board (IASB).

Normally, the US companies report as per U.S. GAAP --as per the accounting practices prevalent largely in the USA &

international companies with global presence , report as per the IFRS

Do all companies have to use these financial reporting standards

Yes. All companies al over the globe are required to report under therelevant accounting standards, as laid down by the relevant body of the accounting profession.

This is to maintain uniformity in accounting practices as well as to lend credibility, reliability & transparency to the facts & figures contained in the financial statements.

Above all, these reporting requirements, safeguard the interests of the various stakeholders of the company , to name a few: shareholders, creditors, customers, clients,all regulating authorities of the government including the IRS, potential investors & all users of the financial statements.

In short, companies need to disclose the gyst of the yearly transactions, strictly as per the format , as laid down under the standard, to make it comparable atleast under the same industry.

Companies can choose & stick to one standard.

Currently, there are efforts underway to merge all the accounting standards of the globe & create one globally acceptable international accounting standard , as companies are increasingly operating in a global arena.

(Written on own-So, could cite no source)