In accounting we have many different words and definitions that are often used in our everyday jargon when we speak of accounting, some of those terms are; General accepted accounting principles (GAAP) and International financial reporting standards (IFRS). Generally Accepted Accounting Principles (GAAP), by definition is, ‘The common set of accounting principles, standards and procedures that use to compile their financial statements’ (Spiro, 1996). GAAP is a combination of authoritative standards that have been agreed upon by taxing authorities and the commonly accepted ways of recording and reporting accounting information. Another term that is frequently used in the accounting world is the international Financial Reporting Standards (IFRS), IFRS is, ‘A set of international standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board. IFRS are sometimes confused with International Accounting Standards (IAS), which are the older standards that IFRS replaced. (IAS were issued from 1973 to 2000) (Spiro, 1996).
Norwalk Agreement refers to a Memorandum of Understanding signed in October 2002 between the (FASB), the US standard setter and the (IASB). The agreement is so called as it was reached in . The Agreement was a significant step towards the US formalizing its commitment to the convergence of and (March, 2009). Generally Accepted Auditing Standards or GAAS are sets of standards against which the quality of are performed and may be judged. Several organizations have developed such sets of principles, which vary by territory (May 2006). The last part of all this is the International Auditing and Assurance Standards (IAAS) which is, an independent standard-setting that serves the interest by setting high-quality standards for auditing, review, other assurance, quality control, and related services. Through its standards, the IAAS seeks to enhance the quality and consistency of practice throughout the world and strengthen public confidence in the auditing and assurance professional at the global and local levels.
For the purpose of the aforementioned definitions and terms we look at three companies, Apple, Swatch and Nikon. Each of the companies is among the top of their field for the products that they advertise. Apple is known for its electronics, specifically computers, ipods, ipads, etc. Swatch is known for its watches and Nikon is known for its cameras and binoculars. Each company has not only gained extensive popularity throughout the world for its products, but also for the tremendous amount of profits they have earned over the years for their continuous advancement and top-of-the-line products. Each of the companies had prepared their financial statements to make sure that they are in compliance with the GAAP. They list their profits as well as their losses, net sales, income, so on and so forth. Each has a balance sheet, each lists its’ financial statements for at least the current year and the three plus years prior.
They have even started adhering to the Financial Accounting Standards Board (“FASB”) accounting standards related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements (“new accounting principles”). The new accounting principles permitted prospective or retrospective adoption, and the Nikon Company has even elected retrospective adoption during the first quarter of 2010. All the companies have a financial fiscal year to which they use to gauge how well the company may or may not be doing. Each company expects to improve on the numbers they had the year(s) prior and each focuses on expanding its market. By trying to expand they want to make sure that people in other countries are fully aware of brand.
By trying to make sure that others are aware of their respective brands they must also spend money in order to advertise. In order to advertise or market their brand they must spend. Advertising or marketing must also be factored into their plans and in those plans they require a budget. No company or individual for that fact can be successful over an extended period of time without a functioning budget. In order to have an effective budget you must factor in the potentials, potentials for money lost, overhead, faulty products, ineffective advertisement, research and development.
Bibliography
Financial Accounting Standards Board and International Accounting Standards Board (2002). . Retrieved March 17, 2009.
The INTOSAI Financial Audit Guidelines are based on the International Standards on Auditing (ISA) issued by the IAASB Retrieved May 26, 2006.
Statements on Auditing Standards. (n.d.). Dictionary of Accounting Terms. Retrieved August 20, 2011, from Web site:
