The evolution of financial reporting from GAAP to IFRS and beyond
Kawa Wali & Rodrigo Velasco
Abstract
The evolution of financial reporting standards has been marked by significant shifts from the traditional Generally Accepted Accounting Principles (GAAP) to the globally recognized International Financial Reporting Standards (IFRS). This research explores the historical development, key differences, and implications of transitioning from GAAP to IFRS, along with emerging trends that may shape the future of financial reporting. Through a mixed-methods approach, including qualitative interviews with accounting professionals, auditors, regulatory bodies, and quantitative analysis of financial data from organizations that have undergone this transition, the study aims to provide a comprehensive understanding of the impact of IFRS adoption on financial transparency, comparability, corporate governance, and investor behavior. The findings indicate that IFRS adoption improves financial transparency and comparability, positively influences corporate governance, and enhances investor confidence. Furthermore, the study highlights the growing importance of Integrated Reporting (IR) and Sustainability Reporting, as well as the transformative role of technology in financial reporting. Future research should focus on longitudinal studies to assess the long-term impacts of IFRS adoption and explore the integration of emerging technologies, such as blockchain and artificial intelligence, in financial reporting. These insights will be valuable for policymakers, businesses, and stakeholders in navigating the evolving landscape of financial reporting, ensuring better decision-making and enhanced global financial coherence.
Keywords
financial reporting, accounting standards, financial transparency, corporate governance, financial technology, regulatory bodies
Author information & Contribution
Kawa Wali. Corresponding author. Ph.D. in Financial Accounting, Senior lecturer and financial adviser, Salahaddin University-Erbil- Kurdistan Region-Iraq, Email: kawa.wali@su.edu.krd
Rodrigo Velasco. Gulf College, Sultanate of Oman
“All authors equally contributed to the conception, design, preparation, data gathering and analysis, and writing of the manuscript. All authors read and approved the final manuscript.”
Disclosure statement
No potential conflict of interest was reported by the author(s).
Funding
This work was not supported by any funding.
AI Declaration
Notes
This paper is presented in 5th International Conference on Multidisciplinary Industry and Academic Research (ICMIAR)
Acknowledgement
References
American Institute of Certified Public Accountants (AICPA). (2023). History of GAAP. https://www.aicpa.org/
Bae, K. H., & Jeong, H. (2022). Corporate governance and financial reporting quality: New evidence post-IFRS adoption. Journal of Corporate Finance, 74, 102152. https://doi.org/10.1016/j.jcorpfin.2021.102152
Ball, R. (2006). International Financial Reporting Standards (IFRS): Pros and cons for investors. Accounting and Business Research, 36(sup1), 5-27. https://doi.org/10.1080/00014788.2006.9730040
Barth, M. E., Landsman, W. R., & Lang, M. H. (2008). International accounting standards and accounting quality. Journal of Accounting Research, 46(3), 467-498 https://doi.org/10.1111/j.1475-679X.2008.00287.x
Barth, M. E., & Landsman, W. R. (2022). How IFRS influences accounting quality and financial reporting. Annual Review of Financial Economics, 14, 131-155. https://doi.org/10.1146/annurev-financial-110321-115007
Bischof, J., & Daske, H. (2021). The impact of IFRS adoption on financial statements: Evidence from international markets. Journal of International Accounting Research, 20(1), 23-45. https://doi.org/10.2308/jiar-19-032
Cascino, S., & Gassen, J. (2015). What drives the comparability effect of mandatory IFRS adoption? Review of Accounting Studies, 20(1), 242-282. https://doi.org/10.1007/s11142-014-9296-5
European Union. (2002). Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards. Official Journal of the European Communities. https://eur-lex.europa.eu/
Gassen, J., & Schwedler, K. (2023). Market reactions to IFRS adoption: Evidence from global equity markets. Accounting & Finance, 63(2), 1025-1053. https://doi.org/10.1111/acfi.12655
Financial Accounting Standards Board (FASB). (2023). About the FASB. https://www.fasb.org/
Hail, L., Leuz, C., & Wysocki, P. D. (2023). Global accounting convergence and the potential adoption of IFRS by the United States: An analysis of economic and policy factors. Accounting Horizons, 36(4), 57-82. https://doi.org/10.2308/acch-19-024
Hail, L., Leuz, C., & Wysocki, P. D. (2010). Global accounting convergence and the potential adoption of IFRS by the United States: An analysis of economic and policy factors. Accounting Horizons, 24(3), 351-388 https://doi.org/10.2308/acch.2010.24.3.351
International Accounting Standards Board (IASB). (2023). About IFRS Standards. https://www.ifrs.org/
KPMG (2020). The impact of IFRS adoption in Canada: A retrospective. https://home.kpmg/
Li, S. (2023). The effects of IFRS adoption on capital markets: A recent review. Contemporary Accounting Research, 40(1), 456-487. https://doi.org/10.1111/1911-3846.12635
Muhamad, K.W., Saleh, S.M., Van Paridon, K. (2020). The impact of changes in accounting standards on earnings management: Applied research from 2003-2014. Koya University Journal of Humanities and Social. https://doi.org/10.14500/kujhss.v2n2y2019.pp166-175
PWC. (2021). IFRS and US GAAP: Similarities and differences. https://www.pwc.com/
Riedl, E. J., & Srinivasan, S. (2022). The impact of IFRS on corporate governance: Evidence from recent studies. Accounting Horizons, 36(4), 57-82. https://doi.org/10.2308/acch-19-024
Soderstrom, N. S., & Sun, K. J. (2007). IFRS adoption and accounting quality: A review. European Accounting Review, 16(4), 675-702 https://doi.org/10.1080/09638180701706732
The Institute of Chartered Accountants in England and Wales (ICAEW). (2023). The history of financial reporting. https://www.icaew.com/
Wali, K., & Darwish, B.K. (2021). Electronic accounting services and their effect on enhancing the efficiency of financial institutions. Journal of University of Babylon for Pure and Applied Science, 29(1), 21-39.
Wali, K. (2021). The value relevance of accounting information based on IFRS in the Netherlands and the UK. Eurasian Journal of Management & Social Sciences, 2(3), 3. https://dx.doi.org/10.23918/ejmss.V2i3p31
Wali, K., Saleh, S., & van Paridon, K. (2019). The causes and effects of earnings management on stock prices. Journal of Economics and Administrative Sciences, 25(116), 93–110. doi:10.33095/jeas.v25i116.1789
Cite this article:
Wali, K. & Velasco, R. (2024). The evolution of financial reporting from GAAP to IFRS and beyond. Industry and Academic Research Review, 2(1), 128-136. https://doi.org/10.53378/iarr.924.125
License:
This work is licensed under a Creative Commons Attribution (CC BY 4.0) International License.
Most read articles
- Senior High School Strand Alignment and Its Implication to The Tertiary Programs: A Basis for Bridging Program
- Reading Comprehension Difficulties Among Junior High School Learners
- Difficulties in the writing skills of Grade 11 HUMSS students
- Factors Influencing Reading Comprehension and Difficulties Among Intermediate Learners: Basis For Developing Remedial Reading Intervention
- Disaster risk reduction and management on earthquake preparedness: An assessment
- Analysis of school rules and regulation implementation: Basis for policy enhancement program
- Identifying gender stereotypes of high school LGBTQ students
- Technical vocational students’ higher learning institution preference and level of academic and skills preparedness
- Lived experiences of senior high school focal persons in the implementation of work immersion program
- Humor as a Teaching and Learning Strategy in a Language Classroom