Absorption Approach to Decision Making
GAAP and IFRS Accounting Standards
US Financial Accounting Standards Board (FASB) promulgates the Generally Accepted Accounting Principles (GAAP) and the International Accounting Standards Board (IASB) promulgates the International Financial Reporting Standards (IFRS). As IFRS was being developed, the IASB had the advantage of being able to use not only GAAP but also the accounting standards various other countries as a guide. Some of the differences between GAAP and IFRS are embodied in the standards themselves, as such, the deviations are intentional. ("US GAAP vs. IFRS The Basics", 2010, p. 2).
Caribou Coffee - Accounting and Auditing Standards. The preparations of Caribou Coffee’s consolidated financial statements are in accordance to generally accepted accounting principles (GAAP) (Caribou Coffee, 2012, p. 39) and external audits are performed in accordance with the standards of the Public Company Accounting Oversight Board. (Caribou Coffee, 2012, p. 33). Internally Caribou Coffee uses Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) to make decisions and to determine operating performance (Caribou Coffee, 2012, p. 22) and are audited based on the on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, otherwise known as the COSO criteria (Caribou Coffee, 2012, p. 34).
Fazer - Accounting and Auditing Standards. The 2011 Fazer Annual Report nor website makes little mention of accounting or auditing standards. The annual report does make the general statements that the its CEO is responsible to ensure that Fazer’s accounting is carried out in according to legal requirements and that its financial management is handled appropriately, that “consolidated financial statement has been prepared according to the acquisition method,” that audits are to ensure “that financial and operative reporting is...