7.What is the difference between convergence and adoption?
Adoption would mean that the SEC sets a specific timetable when publicly listed companies would be required to use IFRS as issued by the IASB.Convergence means that the U.S.Financial Accounting Standards Board(FASB)and the IASB would continue working together to develop high quality,compatible accounting standards over time.More convergence will make adoption easier and less costly and may even make adoption of IFRS unnecessary.Supporters of adoption,however,believe that convergence alone will never eliminate all of the differences between the two sets of standards.
8.Who are the key players in the United States regarding the development and adoption of IFRS?
The key players are the Securities and Exchange Commission,which is responsible for the supervision and regulation of the securities industry and has oversight responsibility for the FASB;the Financial Accounting Standards Board,an independent body that establishes and interprets U.S.GAAP;and the IASB,which is working with the FASB on the convergence of U.S.GAAP and IFRS.The USCPA has provided thought leadership to the IASB and the FASB on financial reporting topics.
9.Have any major U.S.companies begun transitioning to IFRS?
Until the Securities and Exchange Commission issues a rule allowing or requiring U.S.public companies to adopt IFRS,they must continue to prepare their financial statements under U.S.GAAP.Several large multinational corporations,however,have started using IFRS for their foreign subsidiaries where allowed by local law.Also,some U.S.subsidiaries of foreign-owned companies are also using IFRS.
10.When comparing IFRS and GAAP,what are some overall key differences I should be aware of?
The biggest difference between U.S.GAAP and IFRS is that IFRS provides much less overall detail.Its guidance regarding revenue recognition,for example,is significantly less extensive than U.S.GAAP.IFRS also contains relatively little industry-specific instructions.
11.What are some of the most important specific differences between IFRS and U.S.GAAP?
Because of longstanding convergence projects between the IASB and the FASB,the extent of the specific differences between IFRS and GAAP has been shrinking.Yet significant differences do remain,most any one of which can result in significantly different reported results,depending on a company's industry and individual facts and circumstances.For example:
●IFRS does not permit Last In,First Out(LIFO).
●IFRS uses a single-step method for impairment write-downs rather than the two-step method used in U.S.GAAP,making write-downs more likely.
●IFRS does not permit debt for which a covenant violation has occurred to be classified as non-current unless a lender waiver is obtained before the balance sheet date.
12.Is the possible conversion to IFRS from U.S.GAAP solely a financial reporting issue?
Conversion to IFRS is much more than an accounting exercise.It will affect many aspects of a U.S.company's operations,from information technology systems and tax reporting requirements,to internal reporting and key performance metrics and the tracking of stock-based compensation.