Understanding the differences between U.S. GAAP and IFRS Standards

Published on: Dec 11, 2020

In 2002, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) issued a Memorandum of Understanding, which set out priorities and milestones to be achieved on major joint projects. The two boards worked together to improve their standards and seek convergence. The results were mixed with respect to convergence. There has been significant convergence in topics such as business combinations and revenue recognition. However, key differences have increased for topics such as financial instruments and the subsequent measurement of leases.

This publication focuses on some of the most common and significant differences that may affect financial statements when converting from U.S. GAAP to IFRS Standards and vice versa. It reflects differences for standards that are mandatory as of 31 December 2019, for public business entities that have a calendar-year annual reporting period. In addition, since ASC 326 Financial Instruments – Credit Losses became effective for public business entities with fiscal years beginning after 15 December 2019, the publication also offers Appendix A Allowance for expected credit losses in loans and receivables and some debt securities to highlight the key differences between ASC 326 Financial Instruments – Credit Losses and IFRS 9 Financial Instruments.

The publication generally does not cover (1) disclosure-related differences, (2) any guidance related to IFRS Standards for small and medium-sized entities, (3) any guidance related to Private Company Council alternatives for private companies under U.S. GAAP, or (4) any impact of U.S. GAAP industry-specific accounting guidance. It does cover U.S. GAAP and IFRS Standards differences in segment reporting as the impairment rules under both frameworks depend upon the identification of operating segments.

This publication was released by our Global firm.


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