Which of the following is incorrect? US GAAP (issued by FASB) tends to generally be more rules based while IFRS (issue by IASB) tends to be more principles based. The IASB (International Accounting Standards Board) and FASB (Financial Accounting Standards Board) have now made all standards identical; thus financial statements following US GAAP or IFRS are totally consistent and comparable. The AASB (Australian Accounting Standards Board) issues Australian accounting standards (which are based on standards issued by the IASB). Australia adopted IASB standards (IFRSs) on or after 1 January 2005.
Question
Which of the following is incorrect? US GAAP (issued by FASB) tends to generally be more rules based while IFRS (issue by IASB) tends to be more principles based. The IASB (International Accounting Standards Board) and FASB (Financial Accounting Standards Board) have now made all standards identical; thus financial statements following US GAAP or IFRS are totally consistent and comparable. The AASB (Australian Accounting Standards Board) issues Australian accounting standards (which are based on standards issued by the IASB). Australia adopted IASB standards (IFRSs) on or after 1 January 2005.
Solution
The incorrect statement is: "The IASB (International Accounting Standards Board) and FASB (Financial Accounting Standards Board) have now made all standards identical; thus financial statements following US GAAP or IFRS are totally consistent and comparable."
While the IASB and FASB have been working towards convergence of IFRS and US GAAP, they have not yet made all standards identical. Therefore, while there may be many similarities, financial statements prepared under US GAAP and IFRS are not totally consistent and comparable.
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