…Information has to be easily obtainable in a timely manner.
Financial statements have to be prepared for each economic entity. Example can be General Electric. It has to create separate sets of documents for each of its subsidiaries.
Going concern is an assumption that business will continue to operate indefinitely.
Assets must be reported in their realizable value or historical cost but not higher than that. If a significant loss occurs in the value of an asset, it has to be written down to reflect the change.
Materiality concept demands to reportevents that will make a difference. Usually it is compared to 10% of the net income.
Conservatism is a rule that demands accountants in the case when two different rules can be used, to use the one with the most conservative result; the lowest revenue and the highest expense.
Financial regulations have been a growing concern all over the world. International financial reporting standards (IFRS) have been created as a response to the globalization. It creates an even playing field and makes it easier for the international companies to enter the markets.
Finally let’s see, what the difference between the GAAP and IFRS is. The difference is in the concept of regulation. IFRS encourages hones reporting and gives more flexibility in technical aspects while focusing or accounting concepts, while GAAP has a rule for almost every situation possible. In my view, any financial regulation has to be focused on the concept to make sure financial statements are accurate.
I hope this article gave you an idea of who accounting regulators are and what they are trying to accomplish. You can learn more about these concepts and blog with Dr. Wayne Label, CPA on his webstie or by emailing him.