GAAP comprises of conventions, rules and procedures that constitute

accepted accounting practices at any given point of time. There are different ways
in which accounting treatment can be done for a transactions or events.
Significance of GAAP

 GAAP differs from country to country. GAAP should not defeat the provisions of
law in a particular country. Hence it is subject to local rules and regulation

GAAP applies to the whole accounting process beginning from recording the
transactions till the communication of accounting and financial information to end
users
It gives broad guidelines regarding the rules to be followed while preparing
financial statements. There are numerous accepted laws, rules , procedures and
practices in forces in a country. Hence it presents alternative accounting
treatments in respect of a particular transactions. For example, closing stock
Valuation, methods of charging depreciation etc

 The base to prepare accounting standards has been derived from GAAP.
IFRS- International Financial Reporting Standards
standards issued by the JFRS foundation and the International Accounting
Standards Board (IASB) to provide a common global language for business
affairs so that they are understandable and comparable from companies to
companies and country to country
Need for IFRS
IFRS are standard in many parts of the world, including the European
Union (EU) and many countries in Asia and South America, but not in the
United States
Countries that benefit the most from the standards are those that do a lot of
international business and investment
It will give more reliability to financial information. Investors will make more
investment in the company as the company follows more transparent
business practices at international level
It enables companies to prepare financial statement as per global standards