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US GAAP Vs IFRS


Adoption of International Financial Reporting Standards by US Companies will change the role of finance professionals. On November 14, 2008, the SEC released its proposed roadmap for the adoption of IFRS in the US thus affirming SEC focus on moving towards global accounting standards. In the Roadmap, the SEC did not set a definitive adoption date, but rather set forth several milestones that, if achieved, could lead to the required use of IFRS by US issuers beginning in 2014. Early adoption is permitted for the qualified companies for the period ending as early as December 15, 2009.


Following are the major highlights of the roadmap-

SEC Roadmap

  • 2009 - Early adoption permitted for qualified companies for periods ending December 15 , 2009

  • 2011 -SEC will evaluate the success of early adopters and progress against the pre-defined mile stones.

  • 2014 - IFRS filing for large accelerated filers for Fiscal years ending on or after December 15, 2014.

  • 2015 - IFRS filing for accelerated filers for Fiscal years ending on or after December 15, 2015

  • 2016 - IFRS filing for non- accelerated filers for Fiscal years ending on or after December 15, 2016.

Regardless of the date US companies are required to adopt IFRS, in the near-term one can see continued convergence between US GAAP and IFRS accounting standards, followed by ultimate conversion to IFRS.


An agreement between the Financial Accounting Standards Board ("FASB") and the International Accounting Standards Board ("IASB"), called the Memorandum of Understanding ("MoU") pledges to improve both US GAAP and IFRS in 11 major topical areas such as revenue recognition, leasing, consolidation, financial instruments, debt and equity. The effects of these accounting changes reach far beyond just financial reporting.


We believe that the adoption is inevitable and would also be in the best interest of investors and companies as they move towards a single set of robust global accounting standards ensuring better transparency across nations.

 

Impact of IFRS on US Companies

Differences between IFRS and GAAP

Steps to be taken by US Companies to get IFRS Ready

Advantages of IFRS

Disadvantages of IFRS

 
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