GAAP and IFRS Foundation Principles

Vocabulary flashcards covering the definition of GAAP, regulatory frameworks, rules-based vs. principles-based accounting, and the structure of the IFRS Foundation.

GAAP (generally accepted accounting principles)

A general term for a set of financial accounting standards and reporting guidelines used to prepare financial statements in a given jurisdiction.

Statute

Laws, such as a companies act, that require the production of financial statements at specific times and may mandate a set format.

Accounting standards

Detailed guidance issued by professional accounting bodies on accounting for different types of transactions.

Accounting Standard Codification (ASC)

The source of accounting standards applicable in the USA, issued by the Financial Accounting Standards Board (FASB).

UK Financial Reporting Standards (FRS)

The national accounting standards applicable to companies in the UK.

Indian Accounting Standards (Ind-AS)

The national accounting standards used in India.

Malaysian Financial Reporting Standards (MFRS Accounting Standards)

The national accounting standards used in Malaysia.

Korean accounting standards (K-IFRS)

The national accounting standards of Korea which are identical to IFRS Accounting Standards.

Conceptual framework

A set of general principles that underlie standards and can be applied in the absence of a standard dealing with a specific transaction.

Best practice

Methods of accounting developed by industry or accounting firms in the absence of specific guidance for a certain transaction.

Companies Acts 2006

A UK statute that requires the preparation of financial statements in specific formats.

Rules-based accounting standards

Standards that prescribe rigid accounting treatments with little requirement for judgement, using specific thresholds known as bright lines.

Principles-based accounting standards

Standards, such as IFRS, whose application requires a level of judgement based on the specific circumstances of a transaction.

IAS 2 Inventories

An accounting standard that introduces a rule requiring inventory to be measured at the lower of cost and net realisable value.

IFRS Foundation

A not-for-profit public interest organisation established to develop high-quality, understandable, enforceable and globally accepted accounting and sustainability standards.

International Accounting Standards Board (IASB)

The standard-setting body of the IFRS Foundation responsible for producing IFRS Accounting Standards.

International Sustainability Standards Board (ISSB)

The standard-setting body of the IFRS Foundation responsible for producing IFRS Sustainability Disclosure Standards.

IFRS Interpretations Committee (IFRSIC)

A body that works with the IASB to support the application of standards by responding to user questions and issuing IFRIC Interpretations.

IFRIC Interpretations

Guidance issued by the IFRSIC that is considered to have the same status as IFRS Accounting Standards.