Considering the historical development and the hybrid nature of the SA GAAP (replaced) which is believed to have little difference and much similarity with IFRS, are they material differences that are substantial?
One difference is that IFRS in South Africa made the financial statement of SA companies to become comparable with the financial statement of foreign companies. The SA GAAP made the financial statments of SA companies incomparable with the financial statement of foreign companies.
Financial Statements prepared in accordance with the IFRS make AFS comparable around the world as most countries apply the IFRS when preparing and reporting on financial activities of the company. SA GAAP take their lead from GAAP but look at the South African context as it is not the statutory and legislative reporting requirements of financial statements.
•GAAP is much more rules-based than IFRS.
•IFRS focuses more on general principles than GAAP, which makes the IFRS body of work much smaller, cleaner, and easier to understandthan GAAP.
# Under GAAP, companies may have industry-specific rules and guidelines to follow, while IFRS has principles that require judgment and interpretation to determine how they are to be applied in a given situation.
# In order to increase comparability, in recent years the two standard setting bodiesmade efforts to reduce the differences between IFRS and U.S. GAAPs.
# This process is referred to as convergence
# As a result of these convergence efforts, it is likely that someday there will be a single set of high-quality accounting standards that are used by companies around the world.
The SA GAAP seem to be one of the closest GAAPs with little difference from the IFRS. Considering that SA started to align and unify its accounting practices along the international standard. By the introduction of IFRS, almost all SA GAAP rules and disclosures were similar to the provisions of IFRS and the assertion of South African institute of Chartered Accountants (SAICA) confirms that there are no material financial gain or difference in the adoption of IFRS as a replacement to SA GAAP. While they are few literatures relating to SA GAAP, majority of the existing literatures are anchored on US GAAP.
The primary difference between the two systems is that GAAP is rules-based and IFRS is principles-based. This disconnect manifests itself in specific details and interpretations. Basically, IFRS guidelines provide much less overall detail than GAAP.
The main distinction between the two accounting systems is that GAAP is based on regulations, whereas IFRS is based on principles.