Accounting -Ifrs

The International Financial Reporting Standards implementation in the United States

Webster University

May 3, 2011

Abstract

The purpose of this paper is to discuss the United States transition from the Generally Accepted Accounting Principles (GAAP) to adopting the International Financial Reporting Standards (IFRS). The IFRS is a set of global accounting standards that United States corporations are preparing to adopt. The adoption of these standards will replace GAAP, which is currently used in the United States. The new adoption will bring about many changes that will offer a variety of advantages and disadvantages. This change will allow clear, concise and consistent reporting standards for domestic, as well as, global business relationship. The transition will be long and one that will require budget adjustment and training for existing employees as well as future employees.

The International Accounting Standards Board (IASB) developed a set of accounting standards that are becoming the global standards for the preparation of financial statements for public companies that is known as the International Financial Reporting Standards (IFRS). The Securities and Exchange Commission have been supportive of developing a core set of accounting standards and is currently determining when United States companies will use the IFRS and if it will be a mandatory adoption (American Institute of CPAs, 2011).

The international standard-setting process began years ago to establish accounting standards for smaller nations who weren’t able to establish their own. At that time states in the European Union adopted techniques from the new standards to assist with the preparation of their financial statements (Fellman, 2008). Problems emerged when multination had to prepare several different sets of financial statements for different jurisdictions (Fellman, 2008)....