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What is IFRS?
International Financial Reporting Standards (IFRS) are a set of accounting standards, developed by the International Accounting Standards Board (IASB), that are becoming the global standard for the preparation of public company financial statements.
The IASB is an independent accounting standard-setting body, based in London.
Other FAQs:
How widespread is the adoption of IFRS around the world?
What are the advantages of converting to IFRS?
When comparing IFRS and GAAP, what are some overall key differences I should be aware of?
What are the advantages of converting to IFRS?
GAAP vs IFRS
By adopting IFRS, a business can present its financial statements on the same basis as its foreign competitors, making comparisons easier. Furthermore, companies with subsidiaries in countries that require or permit IFRS may be able to use one accounting language company-wide. Companies also may need to convert to IFRS if they are a subsidiary of a foreign company that must use IFRS, or if they have a foreign investor that must use IFRS. In addition, companies may benefit if they wish to raise capital abroad. What could be the disadvantages of converting to IFRS?Despite a general consensus of the inevitability of the global acceptance of IFRS, many people also believe that U.S. GAAP is the gold standard, and that something will be lost with full acceptance of IFRS. Further, certain U.S. issuers without significant customers or operations outside the United States may resist IFRS because they may not have a market incentive to prepare IFRS financial statements.
Some other U.S. issuers may have to stick with U.S. GAAP because it is required for filings with other regulators and authorities, thus resulting in extra costs than currently incurred by following only U.S. GAAP.
Anotherr concern is that worldwide, many countries that claim to be converging to international standards may never get to 100 percent compliance. Most reserve the right to carve out selectively or modify standards they do not consider in their national interest, an action that could lead to incomparability – one of the very issues that IFRS seek to address. Who are the key players in the United States regarding the development and adoption of IFRS?The Securities and Exchange Commission, which is responsible for the supervision and regulation of the securities industry; the Financial Accounting Standards Board (FASB), an independent board that establishes and interprets GAAP, and the IASB, which is working with FASB on the convergence of GAAP and IFRS. Through its Accounting Standards Executive Committee, the AICPA has provided thought leadership to the IASB on financial reporting topics. Have any major U.S. companies begun transitioning to IFRS?Until the SEC issues a rule allowing or requiring U.S. public companies to adopt IFRS, they must continue to prepare their financial statements under GAAP. Several large multinational corporations, such as Procter & Gamble, however, have started using IFRS for their foreign subsidiaries where allowed by local law. Also, some private companies owned by foreign companies are using IFRS to obtain financing in the U.S.
If you have or are purchacing or starting a division outside the USA we can assist you today that way with the global entanglements out of the way it will be much easier when IFRS becomes the standard. If you are interested please send us a quick note in the form to the right. Getting in aon an position today will only ease the transition later.
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We genuinely care about our customers and go above and beyond to provide the best customer support. We do these things, and more, while providing you with service at a good value.
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