Comparison between IFRS, US-

GAAP and Moroccan GAAP

Financial analysis
Academic year : 2022/2023

Formed by :

M. Abdelkader El Alaoui Realized by: Siham Lazraq

Mohammed Malihi

Lina Jana

Ahmed Laagouz

Omar Charfi

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 INTRODUCTION
Since the introduction of IFRS, a public traded companies in Europe are
required to adopt the standard requirement in reporting their financial
statements. While in the United States, foreign companies reporting under the
new IFRS were required by the Securities and Exchange Commission (SEC) to
provide a reconciliation between IFRS and the U.S. generally accepted
accounting principles (U.S. GAAP) in filing their financial reports.

IFRS :
Normes IFRS (International Financial Reporting Standards). is the International
Financial Reporting Standard, which aims to standardize the presentation of
internationally exchanged accounting data. IFRS accounting standards are
published by the International Accounting Standards Office, and its abbreviation
is IASB. Since 2005, they have replaced the ias marked IAS (International
Accounting Standards). However, there are still standards marked by IAS
(International Accounting Standards). In the 2000s, some financial scandals
highlighted the lack of transparency of the information made available to
private investors. The IASB was created to harmonize accounting reporting
internationally and allow investors to determine the financial position of a
company.

US GAAP :
The so-called US GAAP standards, an acronym for "United States Generally
Accepted Accounting Principles", refers to the accounting rules in force in the
United States. They are the American counterpart of IFRS, "International
Financial Reporting Standards", accounting standards in force in Europe since
2005.

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 Comparison between IFRS, US-
GAAP and Moroccan GAAP
The same logic underlies the Modigliani-Miller theorem in financial economics.
Income and Income are subsets of Income. Thus, for example, according to the
framework, income can be defined as "an increase in a particular type of
economic benefit in the course of ordinary activities in the form of an increase
or improvement in assets or a reduction in liabilities and resulting in an increase
in equity" (DRSC, EFRAG and CNC). , 2007). The same is true for US GAAP
(FASB, 1984, 1985). For example, a commission under Definition 2 is as
follows: A commission is a reduction in equity, excluding distributions to equity
participants.
There may be confusion about the terminology here, that Hicks actually uses the
term income to refer to net income. Therefore, in the accounting dictionary,
Hicks' income corresponds to profit and not income. The distribution of income
between income and income in the framework may also find a counterpart in
Hicks. Specifically, Hicks' second definition of profit implies the sustainability
of the profit stream, with income being directly related to profit and income
being only indirectly related: "Behavior-related income must always exclude
abnormal income; if this happens, otherwise, it should be treated as an increase
in revenue in the coming weeks rather than some actual income in the current
week. Instead, IAS 1 only requires an entity to recognise in net income all items
of income and expenses in a period. Here again, there is a connection with
Hicks, whose third and final definition of profit is expressed in terms of real
numbers, thus implicitly distinguishing profit and maintenance of capital. The
framework does not express a preference for maintaining financial or physical
capital, and in principle it allows one or the other. The findings of IAS 1 suggest
that the IASB is indeed willing but unable to do so. In this definition,
"transactions with owners as owners" replace "contributions of participants to
capital," likely because "transactions" include contributions and distributions,
and equity participants may play other roles, such as employees. If profit is
simply defined as income minus expenses, the complexity of both definitions
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disappears, allowing for a less verbose definition. Interestingly, it is correctly
defined as a change in equity rather than a change in net worth. This was the
case for IASB members who disagreed with IAS 1. Of course, this position is
also consistent with the measure of residual income (Ohlson, 1995). It can also
be noted that the term total is redundant since the full term is also used.
 
IFRS and U.S. GAAP are used for reporting purposes. We focus on the
accounting for impairment of long-lived assets, an area where significant
differences exist between U.S. GAAP and IFRS. We identify all U.S.-listed
firms who have recognized long-lived asset impairment losses during the 2004–
2012 period. From these firms, we identify firms following IFRS, then develop
a matched sample of U.S. GAAP firms, using a propensity score
matching procedure. We examine the relation between impairment loss and
unexpectedly high or low earnings in the year of impairment using a two-stage
Heckman regression model, controlling for industry, country, year of write-
down, and firm-level economic factors. We find that the association between
impairment losses and unexpectedly high and low earnings is significantly
greater for U.S. GAAP firms as compared to IFRS reporting firms, implying
differences in accounting standards influence firm financial reporting. Our
findings are robust to alternative measures of country level institutional factors
and macro-economic variables, as well as inclusion of asset impairment
reversals.
 

Morocco GAAP:
We can say that In Morocco GAAP, accounting is governed by the General Code of
Accounting Standards (CGNC – General Code of Accounting Standardization)

The CGNC in Morocco defines

·      

accounting as a discipline that:

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Collects and aggregates information relating to the financial operations of the company, then
presents this information in the form of accounting entries, and finally, synthesizes this
information in the form of financial statements.

· What are the Accounting

  

Principles in Morocco?
The CGNC has two main objectives:

      • On the one hand, to serve as a basis for information and management of the         
Company;
 
     • On the other hand, give a faithful image of the company to the users of the accounts,
both private and public.
 
To summurize The General Code of Accounting Standards sets deliberately a broad scope of
application. In fact, it specifies that it applies to all economic operators regardless of their
nature and size.
 

Ø  CNGC provides for 7 Accounting

Principles as follows:

·       Continuity of operations

·       Consistency of methods

·      Historical costs

·      Separation of accounting periods
·      Caution
·      Clarity
·      Materiality
Significant importance.

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 Comparative table:
Intangible assets  :
The GOODWILL  / Acquisition
ecrat  :
Set-Up Costs and costs to be
sprea:
Research and development
costs :
IAS / IFRS standars  :
Amortization of certain
intangible assets
• Possible reassessment
• Linear depreciation method
• Recognized as an asset
• Amortization not authorized
following the revision of IAS 38
Note: Goodwill is no longer de-
preciable since the revision of
IAS 38
• IAS 38 prohibits the recogni-
tion of staggered costs or set-
up costs among assets.
• Basic research costs must be
expensed
• Applied research costs must
be expensed
• Development costs can be
capitalized under certain con-
ditions
• Amortization over the esti-
mated useful life
Note a
IAS 38 provides for the capital-
ization of development costs
when the criteria
following are verified
-Probability of generating
profit
-Product clearly identified
- Demonstrated manufactura-
bility
Moroccan accounting
standars  :
• Compulsory amortization of
intangible assets
of the
• Prohibited revaluation
• Linear depreciation mode
• Recognized as an asset
•Mode of linear damping
• Maximum duration 20 years
(useful life of the asset con-
cerned
In Morocco, the PCG (General
Corporate Plan) provides for
goodwill to be amortized,
without exception, according
to an amortization schedule,
the duration of which must re-
flect the assumptions made
and the objectives set at the
time of the acquisition.
• Deferred and set-up costs
are capitalized and amortized
over a maximum period of 5
years
•Fundamental research costs
must be expensed
• Applied research costs can
be capitalized
• Development costs can be
capitalized under certain con-
ditions
• Amortization over 5 years
maximum
In Morocco, the general rule is
the observation in charge.
However, for applied research
and development expenses,
activation is possible if s
-Projects are individualized
-High chances of technical suc-
cess
Commercial profitability is
demonstrated

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 - Intention to sell the product
-insufficient resources

CONCLUSION:
It could be concluded that using IFRS over that of the US GAAP will result to
less earnings because of timing of recognition of expenses. Under IFRS, the is a
great chance that expenses are recognized earlier than under the US GAAP.
There is therefore basis to conclude that earnings under the IFRS are more
conservative than that under the US GAAP. Decision makers using either or a
combination of the set two separate standards will be best benefited if they
understand the difference between two since they may mistakenly consider
something as correct when it fact the figures could actually be less conservative
than the other. If not guarded upon, wrong appreciation of the earnings under
the US GAAP could amount to manipulation of earnings