The Benefits Of The International Financial Reporting Standards

IFRS stands for International Financial Reporting Standards, which is a set of accounting standards that can be used globally by public companies for financial reporting. The set of standards are governed by the International Accounting Standards Board that is based in London. The purpose of converting the U.S to these standards is to streamline all the companies that are abroad and in the United States as far as financial reporting. This process is supposed to produce cost savings for companies that operate in the U.S. and abroad; produce more efficiency and transparency. The IGAAP are and GAAP are very similar and can eliminate duplications of different principles when companies produce financial statements by adopting the IFRS standard.

The convergence to the IFRS may be a cost driver issue for certain companies. For example, a company that does not operate globally, but only in the U.S. will be required to adhere to the new accounting guidelines as well. Also, accountants and finance professionals will have to adapt to the new financial reports and will take some time to understand it. This will require companies and people investing in more training and education to ensure the new financial reports are completed correctly and for understandability. Also the U.S. will lose its originality as far as having its own accounting principles, better known as GAAP. Ultimately the cost/benefit analysis, which is used in accounting for decision usefulness may be outweighed. (Kieso Weygandt Warfield. Thirteenth Edition.page 34) The IFRS could become a burden to certain companies and can face possible resistance from the public sector companies affected by the convergence.). If the IFRS convergence was optional based on the companies market it would be more efficient and eliminate the need for companies that are only U.S. based to make the

The FASB would ensure there are updates and IFRS principles are productive in the U.S. Most likely they would make sure there is no duplication in any of the new accounting principles that are adopted and receive expertise from the IASB to ensure the U.S. companies are reporting there financial information correctly. Additionally, the FASB and IASB would probably coordinate to ensure classification and accounting practices are being used correctly and ensure there are no violations that are occurring due to lack of education. Overall, FASB would probably work together to ensure the U.S. recommendations prior to convergence have been either adopted or a sensible alternative be