FINANCIAL BILINGUALISM AS A SUCCESS FACTOR FOR EFFECTIVE INVESTMENT DECISIONS: THE CASE OF CONTINGENT ASSETS AND LIABILITIES UNDER THE IFRS AND THE US GAAP

With IFRS covering 87% of the world ' s biggest jurisdictions, it is a key success factor for any capital market participants to understand and evaluate accounting information presented in compliance with IFRS. On the other hand, remaining strong position of the USA and US companies on international markets creates a pressure on investors to be able to make decision also on the basis of accounting information presented under the US GAAP. Despite of the ongoing harmonization, the approach of the IFRS and the US GAAP to the recognition and measurement of contingent assets and liabilities differs in many aspects, which, when not taken into account, can imperil a success of any investment. Therefore, the aim of the submitted paper is to provide guidelines on reduction risks resulting from a lack of knowledge of these differences when making investment decisions. Using detailed textual analysis of relevant IFRS and US GAAP provisions, mainly the AIS 37 and the ASC 450, this contribution identifies differences in recognition, measurement and presentation of contingent assets and liabilities under the IFRS and the US GAAP. Theoretical knowledge presented as a result of our research is supported by practical examples and it is summarized in relation to the impact of presented differences on the true and fair view of financial situation of an entity.