IAS vs. GAAP
In the world of accounting there are lots of principles and standards to be followed, most especially if you are trying to prepare those meticulously crafted financial statements and the like. Although these standards may vary per state or country, there are some internationally recognized policies or protocols respected in accountancy, and its other related professions.
The IAS, for one, is known worldwide as the International Accounting Standards. Set by the IAS Committee (IASC) from 1973 to 2001, the IAS has lots of sub entities like the IAS Board (IASB), which is the primary body that sets its actual standards. Many people listen to both the IASB and IASC, not just for their influence, but also because of what they stand for on issues concerning accounting.
Conversely, GAAP, or the Generally Accepted Accounting Principles, is the more Americanized term referring to the accounting standards present in any country. The GAAP basically dictates the rules or standards, as well as the conventions to be followed when one records, summarizes, transacts and prepares financial statements within the nation.
Although the IASC is a powerful entity, it still does not directly control or set the rules for the GAAP. Whenever the IASC forms a new accounting standard, some nations just try to incorporate that standard into their country’s existing set of standards. The said standards were already set by the local accounting board of the nation. They will be the ones that influence what will be the GAAP for their jurisdiction.
To make it clearer, a concrete example is America, wherein the accounting board known as the FASB is in charge of making the actual accounting rules that will later become the GAAP for the country. Thus, it is safe to claim that each nation has their very own set of GAAP. Although individual GAAPs per country are technically different from each other, these GAAPs are almost entirely the same, and may only vary in terms of how the rules are being interpreted.
Furthermore, it was last in 2001 when IASB took the role of the IASC in setting the actual IAS. To date, the IASB has been making and implementing new accounting standards, but is named as the IFRS, or International Financial Reporting Standards. Nevertheless, all the other standards, including the IAS, are still included in the IFRS.
1. GAAP are the more generic accounting rules that every country holds, and are directly influenced by the different accounting boards of each jurisdiction, whereas, IAS is the specific set of internationally recognized accounting standards, set by the IAS Committee.
2. GAAP, in itself, is locally based, while the IAS is globally recognized, and some of its rules or standards are incorporated in the GAAPs of many countries.