Conversion of Generally Accepted Accounting Principles (GAAP) viz. US GAAP and IFRS

GAAP conversion is essential for organizations operating across borders to ensure reporting consistency and regulatory alignment. It enhances investor confidence, simplifies the audit process, and provides a transparent financial view for international lenders, making it easier to raise capital in global markets.

Gap analysis involves identifying discrepancies between current financial reporting and the target framework (US GAAP or IFRS). It evaluates specific policies like revenue recognition, lease accounting, and consolidation rules. Mapping these differences ensures that all financial adjustments are accurately identified before the restatement process begins.

The primary difference is that US GAAP is rule-based, while IFRS is principle-based. Differences often arise in inventory valuation (LIFO vs. FIFO), revenue recognition (ASC 606), and lease treatment (ASC 842 vs. IFRS 16). Conversion services bridge these gaps to ensure accurate cross-border reporting.

Adjustments typically impact assets, liabilities, equity, and revenue. Key areas include deferred taxes, impairment, financial instruments, and Earnings Per Share (EPS). These adjustments ensure that the financial statements are restated and classified correctly to meet the specific requirements of the target accounting framework.

Conversion ensures compliance with specific lease standards like IFRS 16 or ASC 842. This includes recalculating right-of-use (ROU) assets and lease liabilities, preparing lease schedules, and providing necessary disclosures. Proper conversion prevents reporting errors that could impact a company’s debt-to-equity ratio and overall balance sheet.

Consolidation involves harmonizing subsidiary financial statements into a single group report. This process requires inter-company eliminations, foreign currency translation, and minority interest recognition. Specialized GAAP conversion support ensures that group-level disclosures are accurate and compliant with international standards.

Notes to Accounts provide the necessary context for the numbers in financial statements. Under US GAAP or IFRS, these include risk disclosures, fair value notes, and revenue breakups. Detailed disclosures ensure the reporting pack is "investor-ready" and meets the rigorous transparency requirements of global regulators.

Conversion services provide auditors with technical position notes, reconciliations, and supporting schedules. By preparing comprehensive conversion workings in advance, businesses reduce audit friction, ensure policy transformation is validated, and achieve faster, more reliable audit outcomes for international reporting.

By presenting financials under a globally recognized framework like IFRS or US GAAP, companies provide a "common language" for investors. This transparency allows for easier peer comparison, more accurate valuation, and a clearer understanding of the company’s financial health, ultimately unlocking more investment opportunities.

While a company must choose one primary framework for official filings, many global firms maintain a "dual reporting" system to satisfy both local regulators and international investors.

Most experts agree that revenue recognition (ASC 606/IFRS 15) and lease accounting are the most complex areas due to the high volume of data and specific contractual evaluations required.

Foreign companies looking to list on US stock exchanges, subsidiaries of US parent companies, or businesses seeking investment from US-based private equity firms often require these services.