The Impact of Convergency of Ifra & Gaap on Auditors
Abstract
As the convergence of IFRS and GAAP continues to impose new personal and professional challenges on U.S. auditors, it also presents new career opportunities for those who embrace the continuous, accelerating change that characterizes globalization. U.S. auditors who recognize the opportunities and prepare to take advantage of them have little to fear from the convergence. In contrast, auditors who are in denial about the convergence’s inevitable effects face a very different future. 1. Create an argument for or against the IFRS and GAAP convergence process versus a pure adoption of IFRS in the context of impact to the public accounting profession. Approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies, although approximately 90 countries have fully conformed with IFRS as promulgated by the IASB and include a statement acknowledging such conformity in audit reports.
Given all of these factors, measuring the overall impact of convergence with IFRS in the U.S. comes down to a trade-off between the one-time costs of transitioning to a new system, and the relatively modest but recurring benefits of being able to compare reports across borders as well as the recurring cost savings of using a single reporting standard for some firms.
Convergence is driven by several factors, including the belief that having a single set of accounting requirements would increase the comparability of different entities ' accounting numbers, which will contribute to the flow of international investment and benefit a variety of stakeholders. Criticisms of convergence include its cost and pace, and the idea that the link between convergence and comparability may not be strong.
By rejecting IFRS, the U.S. would deal a major blow to the prospect of unified global accounting standards -- a goal that is widely endorsed, including by many American companies and investors. The U.S. would almost certainly lose its
As the convergence of IFRS and GAAP continues to impose new personal and professional challenges on U.S. auditors, it also presents new career opportunities for those who embrace the continuous, accelerating change that characterizes globalization. U.S. auditors who recognize the opportunities and prepare to take advantage of them have little to fear from the convergence. In contrast, auditors who are in denial about the convergence’s inevitable effects face a very different future. 1. Create an argument for or against the IFRS and GAAP convergence process versus a pure adoption of IFRS in the context of impact to the public accounting profession. Approximately 120 nations and reporting jurisdictions permit or require IFRS for domestic listed companies, although approximately 90 countries have fully conformed with IFRS as promulgated by the IASB and include a statement acknowledging such conformity in audit reports.
Given all of these factors, measuring the overall impact of convergence with IFRS in the U.S. comes down to a trade-off between the one-time costs of transitioning to a new system, and the relatively modest but recurring benefits of being able to compare reports across borders as well as the recurring cost savings of using a single reporting standard for some firms.
Convergence is driven by several factors, including the belief that having a single set of accounting requirements would increase the comparability of different entities ' accounting numbers, which will contribute to the flow of international investment and benefit a variety of stakeholders. Criticisms of convergence include its cost and pace, and the idea that the link between convergence and comparability may not be strong.
By rejecting IFRS, the U.S. would deal a major blow to the prospect of unified global accounting standards -- a goal that is widely endorsed, including by many American companies and investors. The U.S. would almost certainly lose its
References: Hail et al. 2009 Johnson 2008; Chasan 2008; DiPiazza et al http://research.chicagobooth.edu/igm/docs/IFRSstudysummary.pdf Sunder S, 2011 IASB & FASB, 2012. IASB-FASB Update Report to the FSB Plenary on Accounting Convergence. Retrieved on Nov 24, 2012 Forgeas R, 2008 Agoglia C, Doupnik T, Tsakumis G, 2010. Principles-Based Versus Rules-Based Accounting Standards: The Influence of Standard Precision and Audit Committee Strength on Financial Reporting Decisions. Retrieved on Nov 24, 2012 Shortridge R, Myring M, 2009 Forgeas R, 2010. Are Critics Against the Adoption of IFRS So Compelling?. Retrieved on Nov 24, 2012 http://www.bloomberg.com/news/2011-06-24/accountants-of-the-world-unite-business-class.html