GAAP financial statements 

Local Generally Accepted Accounting Principles (GAAP) refer to the rules that are required to be followed in a specific country when filing financial statements. GAAP must legally be done by any publicly traded and regulated business. Without it, ramifications may come into play.

This method of reporting financial statements is done all over the world in accordance with local GAAP accounting rules. This ensures that a business’ finances are visible, consistent and comparable. When this is done, business owners and investors can see the overall health of a company.

Our GAAP financial statement services

At Kreston Global, our international network of accounting professionals each excel in complying to their local financial reporting requirements through GAAP. We ensure that your business is able to meet the reporting standards of all the jurisdictions it operates within, keeping all bases covered with our cross-national consultants. Our partner firms have access to some of the best market research, deepening our understanding of a variety of sectors, ensuring that our financial reporting services meet the full needs of each client, identifying areas of improved efficiency and opportunities for growth.

What are GAAP financial statements?

GAAP stands for Generally Accepted Accounting Principles. These principles differ in each jurisdiction, meaning that it can be valuable for your business to consult an expert in the accounting regulations of your operating country. By adhering to GAAP regulations within financial reporting, you can ensure that your business is operating at a high standard of compliance and that your financial reporting is understandable and comparable for stakeholders and investors. By producing high quality and comprehensive financial reporting, businesses can better understand their strengths and weaknesses, communicate better with stakeholders and craft better informed business plans for growth.

Format for GAAP-compliant financial statements

When preparing financial statements in accordance with local GAAP, there are key requirements that must be observed for compliance. Whilst the specifics can vary from country to country, some elements remain consistent throughout. These are the five main principles of any GAAP reporting:

A statement of financial position at the end of the period

This statement includes a summary of financial balances within the business. At the end of a period, the business will show the assets, liabilities and equity of its operations. When this is done, the overall financial position of the business can be understood.

A statement of comprehensive income for the period

The second required financial statement under GAAP is a statement of comprehensive income. This highlights the income of a company whilst displaying expenses too. With this information, the net income for a specific period is visible.

A statement of changes in equity for the period

Local GAAP financial statements will also include changes made to the equity stakes in a business. This will summarise the transactions related to shareholders over a specific period.

A statement of cash flows for the period

Across the period, cash will flow in and out of the business. This is highlighted in this section and shows whether all the revenues on the income statement have been collected.

Notes containing a summary of significant accounting policies and other explanatory information

This final section will be found in the footnotes of your financial statement reporting. It will include additional information on the above statements and the policies your firm follows. This section provides context for your financial reporting and can be important for stakeholders to understand your company’s financial health.

Separate vs consolidated GAAP financial statements

When it comes to your reporting, there are two options available:

The first is consolidated financial statements in accordance with GAAP which refers to the reporting of the finances of two or more companies at the same time. This is done if a parent company has several subsidiaries and stakeholders want to see how the overall health of the company appears.

The second option is separate local GAAP reporting which is the financial reporting of just one business, be that the parent company or a subsidiary. This can be useful when an investor is looking to become a stakeholder in an individual business.

What is the difference between GAAP and IFRS financial statements?

Whilst GAAP reporting is localised and dictated by the country in which your business operates, IFRS (International Financial Reporting Standards) are requirements that are internationally recognised and essential for financial reporting to be comparable globally. Both GAAP and IFRS standards must be met within financial statements. Our accounting consultants provide expert advice in both IFRS and GAAP compliance and can support your organisation through all of its financial reporting needs.

What are Kreston Global’s compliance standards for GAAP financial statements?

Kreston Global partner firms comply with the high professional standards of their respective countries as well as adhering to international regulations. Our understanding of local compliance and regulatory standards allow us to provide exceptional GAAP financial statement consultation across the globe.

As a world-wide organisation we employ an broad internal monitoring programme ensuring that all our members meet the International Standards on Quality Control as well as the International Standards on Auditing for the conduct of transnational audits. All Kreston partner firms follow the code of ethics as dictated by the IESBA (International Ethics Standards Board for Accountants).

As a proud member of the Forum of Firms, an association of international networks of accounting firms, Kreston Global is committed to meeting high standards in financial reporting and auditing practices across our worldwide community.

Wherever you are in the world, wherever your business operates, you can trust our standards to be universally met and exacting.

Why choose Kreston Global for GAAP financial statement services?

Here at Kreston Global, we’ve gained over 50 years of expertise in accounting and finance. This means we know a lot about local GAAP accounting and the challenges that come with it. Fortunately, our network of professionals around the world has the solutions to your problems. If you want to join this network of 25,000 people, become a member.

Want to find out more about our financial reporting services? Contact a member of our team today.