Question

What is the role of the major financial reporting entities in the United States?

Answer 1

There are two major financial reporting entities in the U.S:

IFRS- International financial reporting standard

GAAP- Generally accepted accounting principles

Role of IFRS- Its main role is to develop the rules for globally accepted international financial reporting standards, promoting those standards worldwide. It also considers the financial reporting needs of small and medium scale industries and companies. IFRS also makes sure that there should be no financial fraud, for preventing fraud, IFRS has made rules.

Role of GAAP- It provides the basic and common framework on the basis of which, financial information can be reported. GAAP provides guidelines so that business can know its performance. GAAP tells many assumptions and conventions that should be taken into consideration before accounting is done. GAAP provides easy understanding of rules of accounting. GAAP also saves the rights of investors and stakeholders.