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.
Here at Kreston Global, we make local GAAP simple. With over 23,500 experts across 110 countries, we understand the unique challenges of localised GAAP. Our knowledge means we can provide solutions that work for you. Think we could help your business? Get in touch with one of our specialists today for more information.
Format for GAAP-compliant financial statements
When preparing financial statements in accordance with local GAAP, some requirements must be included in the reporting. Whilst the specifics can vary from country to country, some elements remain consistent throughout. These are the 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.
GAAP requirements for consolidated 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 other 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.
How can we help with your GAAP audited financial statements?
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 23,500 people, become a member.
Want to find out more about our services? Contact a member of our team today.