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The full question is as below:
The globalization of economic activity has resulted in an increased demand for high-quality, internationally comparable financial information. IASB emphasizes the fundamental importance of standards that focus on principles, drawn from the Conceptual Framework, rather than on detailed rules. By comparison, US GAAP is more specific in its requirements and includes detailed implementation guidance.
Discuss the issues relating to principles vs. rules-based accounting standards in the context of the convergence between IFRS and US GAAP. Support your argument with examples.
My question is is it I have only to talk about the difference between and principle and rules based accounting standards? or do I also need to talk about the difference between GAAP and IFRS?
Thanks
Question 1 – for how many marks is this question? Because, if it’s only for 5 or 6, there really isn’t time to get into a ‘full’ discussion about convergence of IFRS and GAAP
Now question 2 – you are not expected to know anything about the detail of US GAAP so the question is asking you for issues that arise when one set of standards is being converged with a different set of standards:
– where one set of standards is explicit, dogmatic, extensive and box-ticking and
– where the other is flexible, based on right-minded thinking, all encompassing and non-prescriptive
What I fail to understand is what it is about the printed solution to this question that you are failing to understand?
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