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Financial accountancy is governed by both local and international accounting standards. GAAP (which stands for Generally Accepted Accounting Principles) is the standard framework for guidelines for financial accounting used in any given jurisdiction. It includes the standards, conventions and rules that accountants follow in recording and summarising and in the preparation of financial statements. On the other hand, IFRS (International Financial Reporting Standards) is a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards (IASs). With IFRS becoming more widespread on the international scene, consistency in financial reporting has become more prevalent between global organisations.
Whilst financial accounting is used to prepare accounting information for people outside the organisation or not involved in the day-to-day running of the company, management accounting provides accounting information to help managers make decisions to manage the business.