International
IASC-U.S. Comparison Project (Second Edition)
The IASC-U.S. Comparison Project:
A Report on the Similarities and Differences
between IASC Standards and U.S. GAAP
Second Edition—October 1999
The second edition of this comprehensive comparative
study of International Accounting Standards Committee (IASC)
standards and U.S. GAAP is now available from the FASB. This
500-page report includes comparative analyses of each of the IASC's
"core standards" to their U.S. GAAP counterparts. The analyses that
were included in the first edition have been revised and new
analyses have been added to reflect changes in both IASC standards
and U.S. GAAP through December 1998. A summary comparison of IAS
10, Events after the Balance Sheet Date, which was approved in
March 1999, also is included.
Order the Second Edition of the IASC-U.S. Comparison Project
Once confined by national borders, transactions in
today's capital markets often are driven by a demand for and supply
of capital that transcends national boundaries. High-quality
accounting standards are a necessary and important element of a
sound capital market system. With the increase in cross-border
capital raising and investment transactions comes an increasing
demand for a set of high-quality international accounting standards
that could be used as a basis for financial reporting worldwide.
The FASB believes that international accounting standards should
increase international comparability while maintaining the highest
possible quality accounting standards. The FASB has been working
independently and with other standard setters around the world,
including the IASC, to achieve that objective. The IASC-U.S.
comparison project contributes to that effort by providing a basis
for further progress toward international comparability.
Last year, the IASC substantially completed its work
program to develop a set of "core standards" to be used in
financial statements for cross-border securities listings. Those
standards are under consideration by the International Organization
of Securities Commissions for endorsement. The U.S. Securities and
Exchange Commission is undertaking a concurrent evaluation in
considering whether IASC standards should be permitted for use by
foreign issuers in U.S. capital markets.
What does this mean for U.S. investors? Investors
need to adequately prepare themselves to understand differences
between IASC standards and U.S. GAAP. Until now, U.S. investors in
U.S. markets have been provided with either U.S. GAAP financial
statements or reconciliations from foreign financial statements to
U.S. GAAP. Those favoring acceptance of IASC standards wish to
replace those reconciliation requirements, which many would-be
foreign registrants consider too "onerous." Using IASC standards
without reconciliation to U.S. GAAP will shift the burden to U.S.
investors attempting to compare investment opportunities among
foreign and domestic companies competing for capital on the same
market.
Standard-setters, financial statement preparers and
auditors, and regulators also need to be aware of similarities and
differences between the financial reports that would be produced
under IASC standards and those produced under national standards.
As part of its evaluation of the IASC's core standards, the SEC
will seek input from those that have an interest in the content and
quality of the financial reports of foreign issuers that list
securities in the United States. This report can assist
participants in that process in gaining a better understanding of
the similarities and differences between IASC standards and U.S.
GAAP. The report analyzes and compares each of the IASC's core
standards (up to and including IAS 39, Financial Instruments:
Recognition and Measurement) to U.S. GAAP in such areas as scope,
definitions, recognition and measurement requirements, and display
and disclosure requirements. The IASC-U.S. comparison report will
be a useful guide for future efforts toward greater comparability
of accounting standards and financial reporting worldwide.
The objectives of the FASB's publication, The
IASC-U.S. Comparison Project: A Report on the Similarities and
Differences between IASC Standards and U.S. GAAP, are to
provide:
- An information base that can be used in
assessing the acceptability of IASC standards for securities
listings in the United States
- A tool for investors, financial analysts, and other users of
financial statements to use in comparing U.S. enterprises with
enterprises that use IASC standards
- A basis for the FASB and IASC to raise the quality of their
standards while narrowing the differences between them.
The report describes a wide range of similarities and
differences between IASC standards and U.S. GAAP. IASC standards
and U.S. GAAP covering the same topic may be mostly similar, they
may differ in the extent or specificity of implementation guidance,
they may be very different in their general approach, or they may
explicitly permit a choice of alternative approaches that can
result in either very similar or very different accounting
treatments between the two sets of standards. In addition, there
are cases in which either the IASC standard or the related U.S.
GAAP addresses a topic not explicitly addressed by the other.
Finally, there are differences attributable to specialized
accounting topics addressed only by U.S. GAAP.
The report was reviewed by a former Secretary-General
of the IASC, a former IASC Research Fellow, current IASC staff
members, SEC staff, and a number of financial analysts and
academics, many of whom are authors of various international
accounting publications. All those reviewers provided useful
comments and suggestions that were incorporated into the final
report.
Part I of the study provides an introduction to the
issue of use of IASC standards in U.S. and other national capital
markets, a summary of the similarities and differences between IASC
standards and U.S. GAAP identified by the FASB staff, and
conclusions on the prospects for international comparability. Each
chapter in Part II provides a comparative analysis of an IASC
standard and its U.S. GAAP counterpart. Summaries at the beginning
of the analysis chapters highlight the most significant
observations. This report will be an invaluable resource to
accounting practitioners, academics, analysts, and others with an
interest in international accounting or a need to understand
similarities and differences between IASC standards and U.S.
GAAP.
Order the Second Edition of the IASC-U.S. Comparison Project
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