Some companies in the U.S.-particularly those that are traded internationally or see a lot of international business-may use dual reporting (i.e., both methods) when preparing financial statements. Publicly traded domestic companies are required to follow GAAP guidelines, but private companies can choose which financial standard to follow. The IFRS Foundation is responsible for overseeing, maintaining and updating the accounting standards in each of these countries. The IFRS is used in over 100 countries, including countries in the European Union, Japan, Australia and Canada. Outside the U.S., the most commonly used accounting regulations are known as the International Financial Reporting Standards (IFRS). From large monetary fines to significant negative impacts on credibility to internal financial issues as a result of incorrect bookkeeping, it is always more advantageous to comply with GAAP guidelines from the start rather than lose out on possible investors and opportunities by failing to maintain high-quality work. If a company is found violating GAAP principles, there are many possible consequences. Hiring a professional accounting team trained in GAAP and having internal auditors track and check finances are two ways to ensure your company is meeting GAAP standards. Any external party looking at a company’s financial records will be able to see that the company is GAAP compliant, making it both easier to attract investors and to successfully pass external audits. This means these companies’ financial statements must follow all the GAAP principles and meet GAAP standards.
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