The Evolution of Generally Accepted Accounting Principles: A Focused Look into the International Financial Reporting Standards

Hongchi Zhang

doi:10.54254/2754-1169/47/20230388

Research Article

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Published on 1 December 2023

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Zhang,H. (2023). The Evolution of Generally Accepted Accounting Principles: A Focused Look into the International Financial Reporting Standards. Advances in Economics, Management and Political Sciences,47,149-155.

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The Evolution of Generally Accepted Accounting Principles: A Focused Look into the International Financial Reporting Standards

Hongchi Zhang *^,1,

¹ University of Nottingham Malaysia

* Author to whom correspondence should be addressed.

https://doi.org/10.54254/2754-1169/47/20230388

Abstract

Financial reporting has long been an essential lens through which shareholders assess the management’s operation of companies and through which external users such as potential investors evaluate how companies are structured and perform financially for economic decision-making. For this reason, the truth and fairness of financial statements is emphasized in financial accounting to reflect the economic substance over the legal form. As cross-border trades and investments grew by leaps and bounds after the World War II, a call for a globally uniform and consistent set of accounting standards thrived in full swing. Hence, the genesis of IAS and subsequently IFRS for better quality, comparability, understandability, and transparency of financial statements. Over recent years, the trend in accounting harmonization with gradual convergence between IFRS and US GAAP has also become prominent. However, accounting standards are never perfect in presenting economic reality upon their inception. Blatant financial scandals play an indispensable role in shaping accounting standards for improvements. This paper takes a focused look into IFRS to examine how the generally accepted accounting principles evolve in reaction to scandals and loopholes criticized, with a detailed analysis of the standards for leases and revenue recognition. A generic discussion on the difference and convergence between IFRS and US GAAP concludes this paper.

Keywords

International Financial Reporting Standards (IFRS), leases, revenue recognition, accounting harmonization

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References

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About volume

Volume title: Proceedings of the 2nd International Conference on Financial Technology and Business Analysis

Conference website: https://www.icftba.org/

ISBN：978-1-83558-141-4(Print) / 978-1-83558-142-1(Online)

Conference date: 8 November 2023

Editor：Javier Cifuentes-Faura

Series: Advances in Economics, Management and Political Sciences

Volume number: Vol.47

ISSN：2754-1169(Print) / 2754-1177(Online)

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