Internatioanal Financial Reporting Standards are on their way. There is a multitude of information coming at us from all directions. We will be providing you with continuing articles, such as this one from Mrunalini, to help you navigate through this substantial change in accounting principles.

Kathy Hostetler, CPA

It is not surprising that many people in the U.S. accounting field are asking questions on why we should be talking or even thinking about International Financial Reporting Standards (IFRS). Shouldn’t U.S. GAAP be the single global standard? Well, it is time to wake up from that dream because clearly IFRS has become a global movement. Currently there are over 100 countries that require or permit the use of IFRS in their markets and the U.S. will soon follow suit.

On Friday, November 14, 2008 the Securities and Exchange Commission issued a proposed “roadmap” containing seven milestones, that if achieved, could result in U.S. issuers (public companies) being required to implement IFRS beginning with fiscal years that end on or after December 15, 2014. Where some eligibility criteria are satisfied, some large multinational companies will be able to implement IFRS as early as 2010. The 165 page proposed roadmap can be found at www.sec.gov/rules/proposed/2008/33-8982.pdf.

The U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have been working closely on converging the accounting standards by eliminating differences in the two sets of accounting standards.

It is importnant that accounting professionals, and thier clients, start moving in the direction of understanding the standards under IFRS and how they differ from current U.S. accounting principles. There is no publication that compares the two broad sets of accounting standards to include all differences that could arise. The difference would depend on a variety of factors like the nature of the entity, its interpretation of the more general IFRS principles, the industry practices, etc. We will be keeping you informed of information regarding this significant change.

Mrunalini Chitale, CPA