ACCOUNTING AND REPORTING STANDARDS OF THE FASB

Accounting And Reporting Standards Of The Fasb

Accounting And Reporting Standards Of The Fasb

Introduction

With the ever-increasing number of organizations in the marketing trade, it is essential to have regulations in place to discourage corruption and fraud. Different countries have varying regulatory agencies to monitor business accounting and data keeping. The United States has adopted the Generally Accepted Accounting Principles (GAAP), which are an accepted uniform of standards and practices used in financial accounting and reporting. The GAAP is, in essence, a checks and balance system that sets and maintains a certain degree of standards. Other countries have different governing standards and practices. Although other practices have different standards and measures, the principles are basically the same as GAAP and monitor accounting practices in those countries.

Two different organizations such as Starbucks and Sony are originated and run in different countries, practice different standards and policy but still have similar principles and guidelines to abide by. To be successful internationally, varying policies need to be measurable in different markets.

Issues with foreign currency

Several differences in the accounting reporting criteria between a company being run in the United States and one being run in a different country. Each country has guidelines and rules when it comes to the criteria for accounting. For example, looking at two companies; Starbuck's and Sony, the accounts are prepared under different regimes. Starbuck's is a US coffee distributor company and the accounts are prepared according to the Generally Accepted Accounting Principles (GAAP). By comparison, Sony is a Japanese distributor of electronics based in Tokyo and its accounts are prepared according to the accounting practices of the ASBJ (Accounting Standards Board of Japan).

The International Accounting Standards Committee (IASC) that was introduced in 1973 was the product of accounting bodies from all major companies culminating together with the objective to formulate, publish accounting standards, and procedures concerning the management of financial statements. A number of differences between these approaches which can result in significant changes in the way accounts presented. It is important that an investor can appreciate these differences and understand how they will impact a company's performance.

U.S. GAAP is the body of respected literature that comprises accounting and reporting standards in the United States. The GAAP framework of accounting standards has been adopted by nearly all publicly traded U.S. companies and Starbuck's is no exception. Many differences and similarities exist between ASBJ GAAP (account reporting method utilized by Sony) and the GAAP (account reporting method utilized by Starbuck's). However, how that information is presented to the public may be very different simply due to the guidelines they follow in their reporting. In their general approach to accounting reporting the GAAP and the ASBJ GAAP are similar in that they use principle-based standards accompanied by detailed application guidance. With regard to property, plant, and equipment, both the ASBJ GAAP and the GAAP use historical cost of those items and the GAAP in its guidelines does not allow revaluations (Smith and Taylor, ...