Chapter 9
Topics include IFRS and the roadmap to adoption in the U.S., comparative corporate governance in various countries, global code of ethics, and international auditing standards.
IFRS and the roadmap to adoption in the US
- Single set of globally accepted accounting standards, from GAAP to IFRS
- SEC permits foreign companies to use IFRS without reconciliation to US GAAP
- SEC road map assumes IFRS will replace GAAP
- SEC questions whether or not to mandate IFRS starting in 2015 o Concerns of the quality of IFRS; is it of high quality and sufficiently comprehensive o Convergence as a “improve and adopt” strategy; improve IFRS before approving it
 Convergence between both sets of standards is less complex and less costly than complete IFRS adoption
Comparative corporate governance in various countries
- Effect on corporate governance systems because audit committees and board of director members will have to deal with convergence issues o Investors and regulators look at restatement negatively, so audit committees and board members will need to address this risk effectively o Managing stakeholder expectations in terms of meeting targets and key performance indicators given the changed results under IFRS
- These people have to monitor the quality and robustness of the conversion process
- Ethical issues exist in corporate governance systems in different countries because business practices and cultural considerations directly reflect way in which companies are managed and controlled
- Germany o 2 tier system: Management Board and a Supervisory Board o Management Board charged with managing the enterprise for the benefit of various stakeholder groups o Supervisory Board
 Members are elected by the shareholders; these are non-management members
 Appoints, supervises, and advises members of the Management Board on policy but does not