Ethics
R E S P O N S I B I L I T I E S
&
L E A D E R S H I P
ethics
Ethics, Professional Judgment and Principles-based Decision Making Under IFRS
By Steven M. Mintz or almost 40 years, a movement has been under way to establish one set of intemational accounting standards for all countries around the world in order to facilitate intemational trade and investment. Since it is no longer unusual to have foreign companies list their stock on the New York Stock Exchange, one common set of accounting standards should go a long way toward increasing the understandability of intemational financial reports. Until recently, listing rules required that non-U.S. companies must reconcile their financial statements prepared under home country standards to U.S. Generally Accepted Accounting Principles (GAAP). However, the SEC now permits foreign com68
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panies to use International Financial Reporting Standards (IFRS), established by the Intemational Accounting Standards Board (IASB), in lieu of the conversion of foreign financial statements to GAAP. On November 14. 2(X)8, the SEC released for comment a proposed road map for the adoption of IFRS that would monitor progress until 2011. when the SEC plans to consider requiring U.S. public companies to file their financial statements using IFRS. The original implementation date of 2014 was pushed back one year to 2015 to give the SEC more time to study implementation issues. The United States is under a great deal of pressure
JANUARY 2011 / THE CPA JOURNAL
to adopt IERS because members of the Euaipean Union did so in 2005 and many other countries have or will be adopting IERS hy the end of 2011. To date, about 120 nations have adopted IERS as their home country standards. The final decision of the SEC to mandate IERS stiuting in 2015 will be based on whether those accounting standards are of high quality and sufficiently comprehensive. The SEC's convergence approach is based on the notion of "improve and adopt"
&
L E A D E R S H I P
ethics
Ethics, Professional Judgment and Principles-based Decision Making Under IFRS
By Steven M. Mintz or almost 40 years, a movement has been under way to establish one set of intemational accounting standards for all countries around the world in order to facilitate intemational trade and investment. Since it is no longer unusual to have foreign companies list their stock on the New York Stock Exchange, one common set of accounting standards should go a long way toward increasing the understandability of intemational financial reports. Until recently, listing rules required that non-U.S. companies must reconcile their financial statements prepared under home country standards to U.S. Generally Accepted Accounting Principles (GAAP). However, the SEC now permits foreign com68
F
panies to use International Financial Reporting Standards (IFRS), established by the Intemational Accounting Standards Board (IASB), in lieu of the conversion of foreign financial statements to GAAP. On November 14. 2(X)8, the SEC released for comment a proposed road map for the adoption of IFRS that would monitor progress until 2011. when the SEC plans to consider requiring U.S. public companies to file their financial statements using IFRS. The original implementation date of 2014 was pushed back one year to 2015 to give the SEC more time to study implementation issues. The United States is under a great deal of pressure
JANUARY 2011 / THE CPA JOURNAL
to adopt IERS because members of the Euaipean Union did so in 2005 and many other countries have or will be adopting IERS hy the end of 2011. To date, about 120 nations have adopted IERS as their home country standards. The final decision of the SEC to mandate IERS stiuting in 2015 will be based on whether those accounting standards are of high quality and sufficiently comprehensive. The SEC's convergence approach is based on the notion of "improve and adopt"