For over a decade the financial accounting standards board and the international accounting standards board have been trying to converge US. GAAP with IFRS for over a decade. James Schnurr, the Securities and Exchange Commission chief accountant, has been communicating the progress of SEC compliance with IFRS. Earlier this year Schnurr spoke at the 14th annual Baruch College Financial Reporting Conference in New York. In his speech he stated there is virtually no support to have the SEC mandate IFRS for all registrants. He also stated that he would probably not the recommendation to the SEC chair Mary Jo White. Reasoning “there is little support for the SEC to provide an option allowing (U.S. public) companies to prepare their financial statements under IFRS”. Schnurr believes there are obstacles preventing the mandating of IFRS usage. Such hindrance includes letting U.S. companies file in IFRS and the fact some of the financial information that is calculated under IFRS in their SEC filings. The SEC currently does not allow the use of non-GAAP standards by domestic issuers causing regulatory constraints because IFRS is considered a non-GAAP financial measure. The Securities and Exchange Commission does permit foreign private issuers in the United States to report their financials under IFRS without reconciliation of GAAP.
In June the chief accountant mentioned that the SEC might allow companies to use IFRS numbers as a supplement to their U.S. GAAP financial statements. Last month Schnurr stated “I believe that the status of the use of IFRS for U.S. companies is better understood today, not only in the U.S. but outside the United States”. At the 34th Annual Current Fi...
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...to adopting IFRS because they know it will require a lot of change from what they are used to and many U.S companies do not like change. U.S. companies would be challenge to do somethings that they are not used to. For example IFRS adoption means companies would have to comply the internal controls of IFRS. According to Markspaneth.com IFRS is often considered the “gold standard” because it provides a high quality of information that is available to investors, regulators and other stakeholders. This is also beneficial to markets, and they would favor the companies and exchanges that IFRS supplies. Companies and exchanges can possibly suffer if they do not have a sufficient amount of information. U.S. companies’ adoption of IFRS will emerge a global standard. Although it may be challenging initially, but in the long run it will be very beneficial for U.S. Companies.
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