Premium Essay

Sec/Ifrs

In: Business and Management

Submitted By themick11
Words 336
Pages 2
For several years, the SEC has been considering the option to adopt IFRS for all U.S. Issuers as a means to have central reporting standards for U.S. to International Company offerings. While the FASB and IASB work on key projects such as revenue recognition, leasing standards, and financial instruments, the SEC continues to analyze this progress and weigh the benefits and concerns with adopting IFRS for U.S. companies. This paper will focus on the concerns of SEC in fully implementing IFRS, what steps some companies are taking to prepare for the adjustment to IFRS, and the outlook of the possibility of a convergence to IFRS in the future. Two major concerns for the SEC in adopting IFRS are the costliness for U.S. companies along with the timeliness of the process. Some of the costs include funding the IASB, maintenance of IFRS, application and enforcement, and tax implications. Meanwhile, companies are preparing for a convergence with IFRS in advance because of some of the complex changes and significant impact to financial reporting for revenue recognition and leasing standards. Also, some companies, such as Ford Motor Company, are adopting IFRS before an official convergence to save time and money. While some standards would be easy to converge with IFRS, others would require many companies to change accounting systems, controls, and procedures, costing companies time and significant costs. Although no official decision has been made on the convergence of U.S. GAAP to IFRS by the SEC, U.S. companies are getting prepared for the possibility of new reporting standards to save time and money in the future. The outlook on IFRS being mandated anytime soon is doubtful given the background of new SEC Chairman, Mary Jo White and her focus on protecting investors and securities law enforcement.

Sources
IFRS USA. “Will IFRS be Mandated Under New SEC Chair...

Similar Documents

Premium Essay

Sec- Accept Ifrs?

...undecided. In February 2010, the SEC generated an IFRS Work Plan in order to promote the development of a single set of high-quality, globally accepted accounting standards. The Work Plan consists of six key areas. The first of these focus on the ability of IFRS to be comprehended, to be consistent, and to be enforced; it is referred to as “sufficient development and application of IFRS for the U.S. domestic reporting system.” The second, “the independence of standard setting for the benefit of investors” emphasizes the IASB’s governance makeup. The third and fourth areas, titled “investor understanding and education regarding IFRS” and “examination of the U.S. regulatory environment that would be affected by a change in accounting standards,” have to do with the education to understand and regulate a new environment. The fifth and six areas address “the impact on issuers, both large and small, including changes to accounting systems, changes to contractual arrangements, corporate governance considerations and accounting for litigation contingencies; and human capital readiness” (www.sec.gov). Previous to the Work Plan, beginning in 2002 the FASB and IASB announced a Memorandum of Understanding (MOU), which was updated in 2006 and 2008, to work towards a single set of standards (www.sec.gov). More recently, in May 2011, SEC staff developed the “endorsement” method in which the FASB would remain control as the U.S. standard setter, while incorporating IFRS over a longer......

Words: 1334 - Pages: 6

Premium Essay

Condorsement

...Beswick's “condorsement” idea would infuse IFRS into U.S. Generally Accepted Accounting Principles by endorsing international standards one at a time while also continuing to converge them to GAAP. The Financial Accounting Standards Board would follow some established endorsement protocol for folding newly issued or amended international standards into GAAP, while also having the authority to modify or supplement them as the boards deems necessary. That would lead to a more gradual transition to IFRS with differences between IFRS and GAAP eliminated over time through further U.S. standard setting. “Condorsement” - An Alternative Framework for IFRS in the United States
by Tim Foley

When the SEC discusses International Financial Reporting Standards (“IFRS”) and the future of U.S. GAAP, it rarely talks about adoption of IFRS or conversion to IFRS. Instead, the SEC refers to the possibility of incorporation of IFRS into the financial reporting system utilized in the U.S. The former suggests a wholesale change, a full commitment. The latter suggests assimilation. However, with its release of a May 26, 2011 Staff Paper, the SEC is now providing more direct insight into some more innovative thinking regarding the future of IFRS in the U.S. 

This staff paper, entitled Exploring a Possible Method of Incorporation, outlines one of several possible approaches to the use of IFRS in the U.S. Additional staff papers are expected in the coming weeks. This first paper explores an......

Words: 1409 - Pages: 6

Premium Essay

Global Factors Slow Chances for Global Standards

...gross domestic product (GDP) of any economy and is a member of the International Financial Reporting Standards (IFRS) which is viewed as the standard for the global economy. The United States has also become committed to integrating into a global set of standards, vowing to join the IFRS which already oversees 12,000 companies in 100 countries. Several of my classmates believe that the having a global standard will create a transparent economy that could lead to an increase in investor confidence. While this is true, there will be not a global set of accounting standards in the next five years due to reluctance of the United States to join the IFRS, China’s standards that are similar to the IFRS but still different, and the current global economic downturn. One of the major obstacles to a global economy is the reluctance of the United States to join the IFRS. Behind the European Union the United States currently has the second largest GDP but as of 2013 is not part of the IFRS. Although the United States Securities and Exchange Commission (SEC) stated in a 2010 press release that, “a step toward achieving the goal of a single set of high-quality global accounting standards, the statement notes that the Commission continues to encourage the convergence of U.S. Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS) in order to narrow the differences between the two sets of standards” they remain uncommitted to joining.......

Words: 972 - Pages: 4

Premium Essay

Conversio of Ifrs

...GAAP or IFRS WHEN WILL WE CONVERT? Paris Williams 10/1/2013 The accounting profession is on the verge of one of the most significant changes since the 1930s. In the very near future there is a great possibility that the United States Generally Accepted Accounting Principles (GAAP), as it is known today, will be replaced by the global standards known as the International Financial Reporting Standards. This paper will provide a history of IFRS and discuss the time frame of the conversion, along with is effects on U.S in the accounting perspective.   Over the past few years, much talk of U.S adopting the IFRS as the basis for accounting principles has circulated amongst the accounting and business world. Although many may resent the conversion from U.S Generally Accepted Accounting Principles (GAAP) to the London-based International Financial Reporting Standards (IFRS), the movement has already began. Plans for this movement have already been proposed and put into effect, project and trials are being observed, and results are soon to come as the SEC and others make their final decision. However, with such a complex transition one must propose many questions such as, how will the movement affect us? What are some of the advantages and disadvantages? How do we adjust, and what is the ultimate benefit and purpose of converting? GAAP and IFRS are two separate sets of accounting standards used in different countries of the world. Although they both have the......

Words: 1422 - Pages: 6

Premium Essay

Us Gaap Convergence with Ifrs

...Devine Hamdani 10/1/11 Project 1 US GAAP Convergence with IFRS As the business world has become more global, regulators, investors, large companies and auditing firms began to realize the importance of the establishment of a single set of high quality accounting standards. With a common accounting language around the world, investors will be able to have greater comparability and greater confidence in the transparency of financial reporting worldwide. IFRS, acronym for International Financial Reporting Standards are financial reporting standards that have been adopted by International Accounting Standard Board (IASB). Increasing number of publicly held companies in many countries are now requiring or allowing the use of IFRS for the preparation of financial statement. In the United States, the Securities and Exchange Commission (SEC) have also proposed a “Roadmap” in incorporating the convergence of US Generally Accepted Accounting Principles (US GAAP) to IFRS with the help of Financial Accounting Standards Board (FASB) and IASB. The IASB and FASB, committed to improving IFRS and US GAAP and achieving their convergence, are also committed in providing public transparency and accountability by reporting their process in achieving their goals. In 2006, the IASB and FASB began to set out their plans of completing major projects in their issued Memorandum of Understanding (MoU). These priority major projects comprises of their joint projects on financial......

Words: 1678 - Pages: 7

Premium Essay

Ifrs vs. Us Gaap

...IFRS vs. GAAP Introduction The U.S. GAAP is accounting principles adopted by the U.S Securities and Exchange Commission (SEC). Over time SEC has been talking about moving these principles over to the IFRS, The International Financial Reporting Standard. “IFRS is an accounting standard that was developed by a not-for-profit group called the International Accounting Standard Board. (www.Ifrs.com)” This summary will give you a subject by subject look of some differences and similarities both the IFRS and the GAAP carry. IFRS 2-1: In what ways does the format of a statement of financial or position under IFRS often differs from a balance sheet presented under GAAP? Accounting follows the double entry standard where transactions are broken down into sections, revenue or expenses, assets or liabilities. Under IFRS, it does not dictate a particular order of accounts on the statement of financial. Usually, companies report their assets in reverse order of liquidity. For example, you would start with long term assets and work your way down to current liabilities. Under GAAP, it requires that all accounts be in order of their liquidity. Cash is usually reported first and non- current assets would be listed last. With these differences financial reporting results would be different for companies. IFRS 2-2: Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial reporting? Explain. No, IASB and FASB conceptual frameworks are organized in......

Words: 937 - Pages: 4

Premium Essay

Article Analysis

...Financial Reporting Standards (IFRS). The SEC began looking into switching in 2010 when the formed a committee to look into the matter and now, two years later, they are still weeks away from issuing report and possibly an additional year away from presenting a formal recommendation. This has led to some frustration from accounting firms, business and stakeholders around the world as they wait for final word. The frustration of IASB is noted in the second follow up article. The decision has wide ranging effects which is what has everyone waiting, some impatiently, for a decision. The US currently adheres to Generally Accepted Accounting Principles, GAAP, which have a few fundamental differences from IFRS and is generally more restrictive than IFRS. Because of the differences, a change to IFRS would result in changes to how companies record financial information as well as how it is reported. This would necessitate not only practicing companies making changes, but how accounting firms audit and in the US as well as how institutions educate future accounting students. The International Accounting Standards Board, which oversees IFRS, is growing impatient as it awaits the SEC decision. It was hoping that the committee report would be accompanied by a recommendation so as to resolve the issue which has been ongoing for 2 and half years now. The article briefly mentions a separate project in which the IASB and FASB are working jointly to make GAAP and IFRS more compatible.......

Words: 501 - Pages: 3

Premium Essay

Strategic Management - Kia

...The Difference between U.S. GAAP and IFRS on Revenue Recognition The Difference between U.S. GAAP and IFRS on Revenue Recognition Trade activities among world economies and the expansion of corporate America overseas have created a need for better and uniform global accounting standards. Many countries conduct businesses globally, especially with the United States. The convergence from Generally Acceptable Accounting Principle (GAAP) to International Financial Reporting Standards (IFRS) can be related to the convergence of Europe, when both entities were in search of common ground to conduct business transactions. As a result of global accounting needs, in 2001 the International Accounting Standard Board (IASB) was given the go ahead by major constituents of the world’s capital markets to develop a single set of high quality accounting standards. This crisis gave birth to the Financial Accounting Standard Board - IASB convergence program (Bahusova, 2009). IASB, along with the FASB, had an open debate in December of 2008 on revenue recognition concerning the changes in customer contract and the obligation between them and the seller. The debate focused on uniform standards for both United States companies that use GAAP and other non- foreign companies using IFRS (Mintz, 2009). The two bodies wanted to achieve continuity on revenue recognition for similar contracts, regardless of the company’s origin. This advancement would increase the quality of......

Words: 1708 - Pages: 7

Premium Essay

International Financial Reporting Standards

...Standards The application of IFRS is spreading all over the world as a result of the development of world economy and increasing transactions among countries and nations. For many years, even now, different countries have different account standards, such as U.S. GAAP, Japan GAAP, and IFRS are mainly adopted by European countries. In recent years, many countries accepted or acknowledged standards used in other countries. In America, for example, the SEC issued that it is possible to adopt IFRS in November 2008 and SEC stated that IFRS is the high quality global accounting standards in February 2010. IFRS, short for International Financial Reporting Standards, are the principles developed by the International Accounting Standards Board (IASB). Nowadays, “it is becoming the global standard for the preparation of public company financial statements.”(Ervin Black) Parts of standards of IFRS are based on International Accounting Standards published by the Board of the International Accounting Standards Committee between 1973 and 2003. “On April 1st, 2001, the new IASB took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and SICs. The IASB has continued to develop standards calling the new standards IFRS.”(Geoffrey Whittington) U.S. GAAP, short for the Generally Accepted Accounting Principles, is more widely accepted in United States. However, SEC announced that......

Words: 1263 - Pages: 6

Premium Essay

Accounting Standards

...Currently many countries have been using Accounting guidelines based on the International Financial Reporting Standards (IFRS) these are managed by the International Accounting Standards Board (IASB). The United States holds companies accountable to Accounting Guidelines maintained by the Financial Accounting Standards Board (FASB) which issues the Generally Accepted Accounting Principles (GAAP) in the U.S. markets are overseen by the Securities and Exchange Commission (SEC). The United States Financial Community is actively looking at the possibility to transition to one global accounting standard; One step towards future adoption is the SEC has recently allowed foreign firms to file reports that conform to IFRS standards rather than mandating they prepare documents using GAAP. (Kimmel, Donald , and Jerry, 64) In July 2012 the SEC’s Office of the Chief Accountant released report outlining the SEC’s reviews of IFRS standards against GAAP standards to identify gaps. While the SEC did not make a recommendation on adoption in the future it was a first step in preparing for an eventual decision. What was found is that while IFRS is a comprehensive standard there are still steps that must be taken before the U.S. can adopt the standards. (PwC) In 2006 the FASB and IASB started work on reconciling the two policies and identified 12 areas in which the IFRS standards differ from GAAP. Of those 3 were identified as priority. These are financial instruments, revenue......

Words: 548 - Pages: 3

Premium Essay

The Convergence of Accounting Standards

...standards was to increase harmonization of international accounting standards to support international economic growth by providing international investors with useful information. Both institutions have evolved throughout the years as financial transactions have become more complicated and new industries developed and evolve. The Financial Accounting Standard Board The FASB evolve from the APB (Accounting Principle Board) that evolved from the CAP (Committee on Accounting Procedures). These organizations developed accounting standards that corporations must follow when preparing financial statements. In 1934 the United States Government created the SEC. The purpose of this organization was to enforce security acts put into place after the great depression and to create standards and regulations. From the beginning the SEC supported the principle that the private sector should be responsible for creating...

Words: 1377 - Pages: 6

Premium Essay

Comparing Ifrs and Gaap

...Comparing IFRS to GAAP In financial reporting the U.S uses the generally accepted accounting principles, to record and report. The international financial reporting standards have been used in over 110 countries all over the world. The have similarities but are very different in structure as well, the GAAP is rules based and the IFRS is more principle based when it comes to financial reporting. I will cover some of these difference and similarities in this essay. In what ways does the format of a statement of financial position under the IFRS often differ from a balance sheet presented under GAAP? The IFRS does not require that the statement of financial position be put into a specific order, when reporting financial information. However most under companies IFRS will report their assets in reverse order of liquidity. Under the GAAP companies are required, to report all accounts in specific order by liquidity. Do the IFRS and GAAP conceptual frameworks differ in terms of the objective of financial reporting? No the objectives are both the same for the GAAP and IFRS, they have very similar ways of reporting financial information. They both want companies to keep the information they report up to date, and data needs to be reported in an honest manner. All data reported should also be useful, to an investor, creditor, or regulator. When information is reported correctly, companies are abiding by the industry standard set forth. What terms commonly used under IFRS are......

Words: 970 - Pages: 4

Premium Essay

Ifrs Versus Gaap

...IFRS Versus GAAP TEAM A Anna Brandon ACC/290 Octuber 8th, 2014 Pat Maccon IFRS Versus GAAP If aiming to invest in emergent markets or to get involved in any kind of business, it is relevant to acknowledge the world’s two main accounting systems: Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). GAAP standards provide direction for almost every accounting setting, including inventory accounting methods and procedures. GAAP is used principally in the United States, although the Security and Exchange Commission (SEC) is looking to switch to IFRS by 2015, the system used in the European Union and many other countries. Many countries have their own accounting systems, although most conform to one main system or the other as they work to keep their markets modern. In fact, the SEC must consider some challenging points before deciding whether the United States should adopt IFRS. For example, companies must ensure that their accounting departments and outside auditors are properly prepared for conversion to IFRS. Conversion may require software upgrades or other adjustments to ensure that data necessary for IFRS reporting are properly being gathered. In addition, because U.S. GAAP and IFRS standards may differ, management will have to re-evaluate the efficiency of internal controls in expectancy of IFRS conversion. Controls must be modified or added. Management will also need to ensure that the issuer's independent......

Words: 933 - Pages: 4

Free Essay

Ifrs vs Gaap

...The IFRS is a better accounting standard system than GAAP because it is used internationally as the primary standard accounting system and it has more enhancing qualities First the IFRS is use internationally as the primary standard accounting system for at least 151 countries (European Union) consisting of two organizations overseeing practices (IFRS and IASB). The IFRS were created plans as a common worldwide language for business affairs. So companies accounts were able to be understandable and comparable across international boundaries. They are a set of conditions of building international shareholding and trade and particularly important for companies that dealing in several countries. They are willing and ready to fight replacing the mainly different national accounting standards. The GAAP is only use by the United States for stock exchange and corporations within the United States but a lot of companies operate outside the U.S. conducting operations on international soil. U.S. accounting standards with respect to history have been set by the American Institute of Certified Accountant subject to Securities and Exchange Commission regulations. The SEC encouraged the establishment for the use of a single person or group standard setting bodies through the AICPA and later the FASB to have a specified opinion that the private sector had the proper knowledge, resources, and talents. GAAP consists of two organizations AICPA and the FASB for publishing accounting principles...

Words: 562 - Pages: 3

Premium Essay

Impact of Ifrs and Gaap Conversion

...Convergence of IFRS and GAAP on Auditors Acc 576 Auditing and Business Concepts Abstract The convergence of IFRS and GAAP continues to present professional challenges for U.S. auditors, it also presents career opportunities for auditors who encompasses the idea of globalized change. The convergence of accounting standards is changing the attitudes of CPAs and CFOs as far as internal accounting is concerned and how the quality of the International Accounting Standards will affect it and the efforts made toward converging IFRS and the GAAP standards. Create an argument for or against the IFRS and GAAP convergence process versus a pure adoption of IFRS in the context of impact to the public accounting profession. With Business and finance globalization, almost a hundred countries have adopted IFRS. Approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies, although approximately 90 countries have fully conformed with IFRS as announced by the IASB and include a statement acknowledging such conformity in audit reports. Motivations for convergence include the belief that it will result in increased comparability between financial statements, which will benefit a variety of stakeholders. One would need to weigh the benefits of a one time cost for transitioning fee, the ability to compare reports, and the benefit of using a single reporting standard for businesses. Assess the cost impact for or against IFRS and......

Words: 1559 - Pages: 7