Paper Topic:

accounting

U .S . GAAP IFRS Convergence

The US Financial Accounting Standards Board (which issues the U .S Generally Accepted Accounting Principles ) and the International Accounting Standards Board (which produced the International Financial Reporting Standards ) signed a Memorandum of Understanding in 2002 aiming to provide a joint effort in aligning the two standards . The IASB said that the parties were developing compatible standards that can be utilized for domestic and cross-board reporting of financial results (IASB , pp . 2 , 2005

In April 21 , 2005 , the Securities and Exchange Commission confirmed that its chairman , William

Donaldson , met with Charles McCreevy , European Union Market Commissioner and confirmed the agency 's support for the proposed convergence . As part of the convergence , the SEC mulled on eliminating the current requirement that non-SEC registrants in accordance with U .S . GAAP . The SEC considered allowing these firms to submit financial statements that comply with International Financial Reporting Standards , which is required in the European Union . The SEC forecast , at that time , that they will be able to eliminate the US GAAP reconciliation prerequisites by 2009 . This was in light of the progress in reduction of the disparities between U .S . GAAP and IFRS

The IASB said in 2005 that the projects that have been completed included

i . Share-based Payment

ii . Inventories

iii . Asset exchanges

iv . Voluntary change in accounting policies

v . Discontinued activities , specifically on assets sold , and

classification of discontinued operations

vi . Depreciation of idle assets or those held for disposal

The IASB acknowledged that issues that the two accounting boards continue to be divergent include (i ) business combinations (ii ) costs related to disposal or exit activities (iii ) income taxes , and (iv segment reporting (IASB , page 5 , 2005

The IASB pointed to a May 2006 commentary in Financial Times by Tommaso Padoa-Scioppa , who said that given that financial markets around the world are integrating , the differences in accounting methods impose an increasing problem on economic efficiency and making cross-b comparisons costly (par . 3 , 2006 . According to Mr . Padoa-Scioppa , the convergence process has to be implemented , despite arguments against it to improve inter-b access to financial markets

In January 2008 , the U .S . SEC issued a final rule that adopted rules that allowed non U .S .-based issuers ' financial statements in accordance with the IRRS , as issued by IASB , without the need to reconcile with the U .S . GAAP (SEC , pp . 20 , 2008

In its ruling , the SEC acknowledged that the convergence efforts between the IFRS and U .S .GAAP have made progress in eliminating many disparities . The SEC acknowledged that its prior complaints on lack of information or disclosure by foreign issuers on certain areas , and the manner of presentation of their financial statements have been resolved by the convergence efforts . The SEC , however , recognize that a number of difference still exist , with some accounting subjects that the IFRS has yet to fully address ( SEC , pp . 20 , 1998

Continuing Differences Between US GAAP and IFRS

According to the SEC , due to their sources , U .S . GAAP and IFRS...

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