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GAAP vs. IFRS: Fraud, Internal Controls, and Cash

Brian Krogol
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All right now, let's talk about some of the differences between Gap and lifers when it comes to fraud, internal controls and cash. So remember, Gap in differs gap, those are the rules we're focused on in this course. These are the generally accepted accounting principles here in the USA and we've got these standards set by the Financial Accounting Standards Board and they create the gap Okay. Internationally. Well internationally there's the international Accounting standards board that's creating ciphers I. F. R. S. International financial reporting standards. Okay so for the most part these are the same. But we've got a few key differences that come up here and there. Let's see what they what they deal with with the content. We've been talk in this chapter. Okay. So similarities between gap and differs when it comes to the internal controls. Well in both cases we need internal controls, right? We saw the value of internal controls to help stop fraud in the company. So this kinda is outside the rules. This is just a healthy business operation, has strong internal controls. And the internal control procedures over over cash, mainly this bank reconciliation that we learned. Well they're gonna be essentially the same when we do a bank reconciliation and all our other cash controls that we have. Another similarity here is when we report cash when we show cash on the balance sheet. So we're showing our assets and we list cash, we usually show cash or we always do, we we list it with our cash equivalents and we have the rule of cash equivalents is generally the same uh in the U. S. And overseas cash equivalents being basically very liquid investments, investments that are maturing in under 90 days and are basically as good as cash. Okay so cash and cash equivalents. We generally show those together. One of the main differences though when it comes to internal controls and fraud and cash, it's the Sarbanes Oxley Act. Sarbanes Oxley remember when we talked about this, The Sarbanes Oxley Act was an repercussion of all the accounting scandals that occurred in the early 2000s. We had Enron and worldcom as two of the big examples we've talked about and the U. S. Government in response uh put out the Sarbanes Oxley Act to put more stringent controls. More stringent standards on internal controls that companies have as well as the financial reporting process. So when they release information to the public there's more strict controls on US companies. But these these standards don't apply internationally. This is a U. S. Law that only applies in the US. So there's some differences there in how strict the reporting is when it comes to US companies. But this only applies to companies on US stock exchanges. Okay, so there's a difference there it's not all companies because there are private companies that use gap as well. Well we we're talking here about public companies that have to follow the Sarbanes Oxley Act. Okay, so that's the big difference here is that that Sarbanes Oxley Act. It only exists in the U. S. A. Cool. Let's go ahead and move on to the next video.