Impact of Ifrs

Donna L. Street

The Impact in the United States of Global Adoption of IFRS

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lthough numerous differences remain between US Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), the differences are being eliminated at an unprecedented pace. The ongoing, steadfast convergence of US GAAP and IFRS, which has followed the formation of the International Accounting Standards Board (IASB) in 2001, clearly reflects the commitment of both the US Financial Accounting Standards Board (FASB) and SEC to promote and assist the IASB in the development of one set of high-quality accounting standards that are accepted globally. Several notable events in 2007 highlight the dedication of the US to global accounting standards. In April 2007, the FASB and IASB agreed that all future major projects will be conducted jointly. That same month a ‘Framework for Advancing Transatlantic Economic Integration between the United States and the European Union’ was signed by US President Bush, European Council President Merkel and European Commission (EC) President Barroso. Among other things, the agreement included a commitment to promoting conditions for US GAAP and IFRS ‘to be recognized in both jurisdictions without the need for reconciliation by 2009 or possibly sooner’ (Bush, Merkel and Barroso 2007). Then in July the SEC (2007a) issued a longawaited proposal and request for comment regarding the elimination of the 20-F reconciliation for foreign registrants reporting under IFRS ‘as issued by the IASB’. A few months later, on 15 November, the SEC Commissioners voted unanimously to drop the 20-F reconciliation for companies using IFRS as adopted by the IASB. An additional SEC (2007b) concept release was issued in August 2007, posing questions aimed at determining whether US-headquartered registrants should also be allowed the option to report under IFRS. While the concept release was outstanding at the time this paper went to press,...