The purpose of this report is to provide relevant background information of the United States’ convergence to International Financial Reporting Standards (IFRSs), and hence the current developments in the relationship between the United States’ Securities and Exchange Commission (SEC), the Financial Accounting Standards Board (FASB), the International Accounting Standards Board (IASB). This report focuses on the current situation of the convergence process and the obstacles of U.S. IFRSs.
This report consists of 4 parts: Background Information, Current Developments in U.S., Obstacles to U.S. adoption of IFRS and Implications of US-IFRS Convergence. In the first part, the report shows the definition of IFESs and the incentives of the convergence. The second part focuses on current developments in U.S. And the third part analyse the obstacles to U.S. adoption of IFRS in three aspects, cultural issue, regulatory issues and practical issues. Lastly, the report provides the likely implications that the US-IFRS convergence will exert on companies.
To sum up, this report aim to give corporations, especially with international operations, and detailed information about U.S IFRSs, to support the fast sustainable development in the future.
Table of Contents
1.0 Background Information3
2.0 Current Developments in U.S.4
3.0 Obstacles to U.S. adoption of IFRS5
3.1 Cultural Issues5
3.2 Regulatory Issues5
3.3 Practical Issues5
4.0 Implications of US-IFRS Convergence 6
4.1 Implications of US-IFRS on tax accounting methods6
4.2 Economic implications of US-IFRS convergence6
4.3 Implications of US-IFRS convergence on technology6
The IFRS Foundation is an independent, not-for-profit private sector organization working in the public interest, which are also responsible for safeguarding the independence of the IASB and ensuring the financing of the organisation (IFRS, 2012). The purpose of this report is to identify issues that will exist in the transition of International Financial Reporting Standards (IFRSs) in United States’ future. Moreover, this report will introduce relevant background information on the IFRSs of U.S, and provide current developments in the relationship between the United States’ Securities and Exchange Commission (SEC), the International Accounting Standards Board (IASB), the Financial Accounting Standards Board (FASB). Then, it will demonstrate some obstacles to the United States’ adoption of IFRS. Lastly, this report will analyse the likely implications of the United States’ convergence to IFRSs.
1.0 Background Information
International Financial Reporting Standards (IFRSs) are recognized as a global business language so that corporation’s accounts can be comparable and understandable internationally. With the growing international shareholding and trade and are pretty important for companies, many different national accounting standards are being replaced by IFRSs. Nowadays, IFRS is widely used in many parts of the world, including the European Union, Australia, Malaysia, Hong Kong, Singapore, South Africa, and India and so on. According to the U.S. Securities and Exchange Commission, there are over 113 countries around the world, including all of Europe in August 2008 (IFRS, 2012). In addition, IFRS adoption worldwide will be beneficial to investor and other users of financial statements, by reducing the cost of comparing alternative investments and increasing the quality of information (Wikipedia. 2012).
2.0 Current Developments in U.S.
Nowadays, U.S. companies have already been influenced by IFRSs, with more and more countries take part into IFRSs, and this impact will be continued.
In 2003, the SEC released a study on the feasibility of a principles-based accounting system. Its conclusion was that the optimal approach would be based on...