Generally Accepted Accounting Principles Assignment

Generally Accepted Accounting Principles - Assignment Example A company can be able to make informed financial decisions basing on the financial statement preparation. Such statements make work easier for governments’ tax authorities as the profit, which they ought to tax, is clearly indicated. This reduces the time they can spend trying to calculate the taxable profits of each business entity operating in the country. Most countries, however, have ditched the GAAP system to the International Financial Reporting Standards (IFRS) accounting system. The International Accounting Standards Board established the IFRS systems and hence it has the mandate of its maintenance. One of the countries that quickly adopted the IFRS accounting system in Australia and the first financial statement prepared to observe the IFRS system was on June 30, 2006. Another notable nation that does not use the GAAP system is Russia whose process of shifting has been long. The country started the process of shifting to using IFRS in 1998 and only became successful in early 2012. The IFRS has numerous advantages, which are the main reasons why these countries decided to use them. Companies in these countries can be easily compared amongst themselves as they apply the same standards in preparing their financial statements. This is particularly used when comparing companies in different countries who use the same standards. Investors are most concerned about the comparing results as they try to ponder the most profitable country to go and start a business in. since most countries use the IFRS system, the comparability is easy and done on a wide scale attracting many investors (H olt, et al 54). The flexibility of the IFRS system compared to that of the GAAP might have been another reason why these countries decided to ditch the latter. Countries prefer a system whose approach is principle-based rather than rules-based philosophy applied in GAAD.