The Pros And Cons Of International Financial Reporting Standards

1218 Words3 Pages
bulb-icon

Recommended: Importance of international accounting standards

Over the last several years, the controversy of the United States adopting International Financial Reporting Standards (IFRS) has been a significant issue for many businesses who are pro Generally Accepted Accounting Principles (GAAP). Although U.S GAAP has been the common accounting principles for many countries, specifically the US, now countries are adopting IFRS. In addition, there are many organizations such as European Union (EU) and International Accounting Standards Committee (IASC), who want domestic and international businesses to have one set of standards to be implemented. On November 14, 2008, the Securities and Exchange Commission proposed a rule named “Roadmap for United States Issuers”. This proposed rule could potentially force businesses that are publicly traded in the United States to begin implementing IFRS for the years after December 2014. Moreover, transitioning from U.S. GAAP to IFRS can effect financial reporting, operations within a company and can cost companies money.
Researchable Questions:
1. If the United States adopts IFRS, What aspects of a company’s operations will be affected?
Adopting IFRS would not only affect …show more content…

We know that there are major differences between the two standards and some key issues that can affect a company. The question is what will the SEC do? Will transitioning to IFRS become enforced for American companies? If, so when and how will this occur? The purpose of writing this research proposal was to analyze if the transition from Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) in the United States only has an effect on financial reporting. We learned that is has an effect on other business operations as well. Moreover, reporting under IFRS has its pros and cons but it is ultimately up to the Securities and Exchange Committee to fully implement what standard they want to U.S businesses to

Show More
Related

  • The United States Should Convert to IFRS

    1069 Words  | 3 Pages

    Also, if United States will switch over to IFRS from GAAP, it will allow US to become a part of the global economy.

    Read More

  • Cooper Industries Proposal to Acquire Nicholson File Company

    2708 Words  | 6 Pages

    Harvard Business School case 274-116. Cooper Industries, Inc. Retrieved on August 31, 2008, from University of Phoenix, Resource, FIN/545 web site: https://mycampus.phoenix.edu/secure/resource/resource

    Read More

  • Telsco Corporation: Case Study: Telco Corporation

    1450 Words  | 3 Pages

    Conclusion: It is evident that if these financial practices were to be followed, David Johnston, the CRA, the business, and its stakeholders will be satisfied. A business must obey IFRS standards, as it provides a corporation with accurate measures of finance and

    Read More

  • The Financial Accounting Standards Board (FASB)

    946 Words  | 2 Pages

    To help accounting professionals easily navigate through 50-plus years of unorganized US generally accepted accounting principles (GAAP) and standards the Trustees of the Financial Accounting Foundation approved the Financial Accounting Standards Board (FASB) Accounting Standards Codification (Codification.) By codifying authoritative US GAAP, FASB will provide users with real-time and accurate information in one location. Concurrently, FASB developed the FASB Codification Research System; a web-based system allowing registered users to electronically research accounting issues. Since 2009, the codification became the single source of nongovernmental authoritative GAAP.

    Read More

  • Addressing Cybersecurity: A Call for Federal Privacy Protection

    1586 Words  | 4 Pages

    The current issues at hand are that companies do not do enough to protect its consum...

    Read More

  • The Differences Between the GAAP and the IFRS Accounting Systems

    1089 Words  | 3 Pages

    In the world of international finance there are two major accounting systems; GAAP, which stands for Generally Accepted Accounting Principles, and IFRS, which stands for International Financial Reporting Standards. The United States prefers GAAP while the European market, as well as many other countries, prefers IFRS. By 2015 the Securities Exchange Commission is anticipating a total transfer to IFRS in the United States. Though the differences between GAAP and IFRS are few, they could affect accuracy of financial reporting throughout the world. It is important to understand the differences and similarities between both GAAP and IFRS if one is to globalize ones market (Logue).

    Read More

  • Centralization Vs Decentralization

    908 Words  | 2 Pages

    Companies will have to be more transparent with clearly defined, centralized, easily manageable departments, which are cost effective and efficient. For example, one client has determined that 80% of its payroll business processes are the same on a global basis – so they are centralizing their payroll operations to optimize that 80%. . .[Also] Pressure will develop to set global standards. As barriers fall between cross-border interaction, global standards will make the exchange of information and the execution of company policies, standards and objectives easier (“What

    Read More

  • Starbucks International Accounting

    1612 Words  | 4 Pages

    Expanding sales to foreign countries can offer a Multinational Company (MNC) higher profit margins, unique products, and technological advantages. One of the major issues that an MNC will face is analyzing foreign financial statements, due to the diversity of accounting guidelines across the world. It’s imperative that companies that decide to go international learn and understand the tax laws and guidelines of other countries, in order to minimize the accounting issues involved in business activities. One of the top coffee producing companies in the world, Starbucks Corp has grown to be a powerful MNC. Their investment in foreign operations and foreign trade requires them to understand international accounting concepts and international financial reporting standards (IFRS). In this report, GAAP concepts used by Starbuck’s will be compared to IFRS.

    Read More

  • IT Governance in Airline Industry Case Study

    1556 Words  | 4 Pages

    Recently, IT governance has been a mainly factor for fulfill business need from investing in IT area. In addition, Sarbanes-Oxley Act (SOX) mentioned IT governance issues for enhancing internal contro...

    Read More

  • Differences Between IFRS And Generally Accepted Accounting Principles

    1060 Words  | 3 Pages

    There are differences between IFRS and GAAP through consolidation, statement of income, inventory, development costs, and earnings per share. Through consolidation, IFRS prefers to have power over their representation of their financial statements and the GAAP prefers to have a risk and reward compensation of their financial statements. In statement of income, the IFRS chooses to not separate out unexpected items in the income statement and the GAAP shows the items right below the net income as both shows a different way of choosing how to report on the income statement.

    Read More

  • Walt Disney Company Case Study

    794 Words  | 2 Pages

    The third risk is the Federal Communication Commission regulation. Any violation with their rules would lead to big consequential losses after being closed down. Therefore, this makes up the largest risk of the three. The company should do all they can to avoid this (Allen, 2000).

    Read More

  • Essay On Holiday Inn

    1543 Words  | 4 Pages

    ...the government requirements of the US Sarbanes-Oxley Act and rules of the NYSE and are also applicable to it as a foreign private issuer (NYSE, 2014). Since IHG is a foreign private issuer it is required to disclose any important ways in which IHG’s corporate practices are different from those of the US companies (NYSE, 2014). These are as follows: Basis of regulation, independent directors, chairman and chief executive officer, committees, non-executive director meetings, shareholder approval of equity compensation plans, code of conduct and compliance certification (NYSE, 2014). Each year all Chief Executives of any US company must confirm to the NYSE that he or she is not aware of any violations by their company with regards to NYSE corporate governance listing standards (NYSE, 2014). These standards in the most part drive business decisions within the company.

    Read More

  • International Financial Reporting Standards

    1068 Words  | 3 Pages

    The globalization of business has resulted in the need for compatible accounting standards that can be used internationally for financial reporting. As a result, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) to unify the various financial reporting methods and create a single accounting standard which can be applied to any financial statement worldwide (Byatt). The global standardization of financial reporting will increase the readability and enhance comparability of globally traded companies’ financial statements, without the need of conversion or translation. There are a few main differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (U.S GAAP). The increasing recognition and acceptance of the International Financial Reporting Standards by accounting professionals in the United States, will affect the way in which the U.S will record financial statements in the future.

    Read More

  • Role and Evolution of The International Accounting Standards Board

    693 Words  | 2 Pages

    The International Accounting Standards Board, (IASB), began life as the International Accounting Standards Committee (IASC) in the 1973. The IASC was created in June 1973 as a result of an agreement by the accountancy bodies of Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland and the United States. These countries constituted the Board of IASC at that time.

    Read More

  • Accounting Regulatory Bodies Paper

    721 Words  | 2 Pages

    The first one of the organizations that is responsible for assisting and overseeing companies is the Security and Exchange Commission (SEC). “The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation” (SEC 2008, ¶ 1). Basically it is the SEC’s job to interpret the laws that congress passes and assist companies in implementing these laws. While Congress makes modifications to laws it is this companies job to also make all companies aware of these changes and help them to make a smooth transition into using the newly amended law.

    Read More

More about The Pros And Cons Of International Financial Reporting Standards

Open Document