Similarities and differences between convergence studies of IFRS and US GAAP, and a firm review

Similarities and Differences between Convergence Studies of IFRS and USGAAP, and a Firm Review. Başkent University, Institute of Social Sciences, International Financial Reporting and Auditing Master's Program, 2021. With globalization, the trade volumes of countries with each other have increased, and the necessity to prepare their financial statements on a common denominator with the same and equal criteria has emerged. The International Accounting Standards Committee (IASC) convened for this purpose and acted for having only one accounting reporting system. The impact of economic globalization in the field of accounting has brought itself into prominence in the field of independent auditing with international accounting standards to which many countries are subject to compliance. "The pressure that emerged from EU countries' eagerness to take advantage of the New York stock exchange in 2005, and beginning to implement these standards, influenced Turkey as well to start practicing." (Erol & Aslan, 2017) On the other hand, the implementation process in Turkey gained momentum as some of the international organizations were eager to disseminate the standards. The first notable attempt in our country was by means of the foundation of the Expert Accountants Association of Turkey (TMUD). Union of Chambers of CPA of Turkey (TURMOB), afterwards, assembled Turkish Accounting and Auditing Standards Board (TMUDESK) on February 9, 1994; and then, the Public Oversight Accounting and Auditing Standards Authority (KGK) was founded. Following these developments, Turkish Accounting Standards were prepared and reached its field of application in a more effective manner. However, as the majority of the countries adopt the standards, The USA rather preferred to implement them obliquely. Thus, the two prominent organization i.e. Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) carried out studies in recent years to eliminate the differences between the standard sets. In the study, firstly, the purpose of financial reporting will be stated, and then, there will be mentioned the kinds of precautions taken to prevent fraudulent financial reporting brought about by accounting scandals, that were caused by companies traded internationally in the capital market, and avoid false and unprofitable information given to individuals and organizations such as shareholders, investors, customers, etc.; and finally the emergence of the need for two sets of standards to speak a clearer common language in order to circumvent a similar accounting scandal that the world opinion faced in the past. The study also covers the joint commitment made by standard setters which met at Norwalk in 2002 to yield harmony and augment the accuracy between the common financial reporting language and the standards. Moreover, the probable disadvantages which may stem from rule-based and principle-based approaches that respectively USGAAP and IRFS adopted, and the studies conducted for alleviating the differences between them are pointed out along with their justifications; and the essential intention of convergence is clarified. The current similarities and differences between the two standards are analyzed on the basis of IFRS in the second part. The third part covers the impact of the different approaches of the two standard sets on the financial reports of one of the leading technology companies in the semiconductor industry, ASML, which prepares its financial reports as per both the sets. Furthermore, the instances that were considered as success or failure by many sectors were mentioned, and some comments regarding this were given. As a result, considering the fact that high profile companies of the countries subject to US GAAP and IFRS want to act jointly on mutual interest issues and that this is much more beneficial for each party, this study aims to present in detail how the actions taken for ensuring harmony from the past to the present have become, the common and currently exist differences between the two standard sets, and the universal accounting standard set which is aimed to be achieved. Key Words: US GAAP, IFRS, IASB, FASB, Adoption, Convergence, Ruled-based, Principles-based, Accounting Standarts, Financial Reporting.