The International Financial Reporting Standards

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The International Financial Reporting Standards, or IFRS, are a set of standards designed to keep accounts comparable internationally. They are increasingly important as we move towards a global economy and with the increasing number of international companies. The United States, however, typically uses a different set of accounting standards. These are called the Generally Accepted Accounting Principles, or GAAP. The SEC has displayed interest in switching to the international standards recently, however. “In November 2008, the SEC proposed a road map that, if several milestones are achieved, could lead to a mandated use of IFRS for domestic listed companies in 2014. These actions of the SEC highlight the dedication of the U.S. to…show more content…
The GAAP, while predominantly only used within the United States, is a very solid and well-written set of standards in itself. While conformity to the IFRS seems inevitable for the United States, support for GAAP remains strong in both companies and government entities. The US Securities and Exchange Commission (SEC) released a 127 page report detailing reasons the United States should opt not to adopt the IFRS in favor of GAAP. Furthermore. “Studies comparing quality of IAS and U.S. GAAP using data from firms that traded in Germany’s New Market, such as Leuz (2003) and Bartov, Goldberg and Kim (2005), find no significant differences between the two sets of standards, suggesting that IAS and U.S. GAAP appear to be of similar quality when applied in German capital market.” (Joos, p.21) Despite the strength of the GAAP and the familiarity that United States companies have with the standards, it is generally accepted that the international standards will be more beneficial in the increasingly global marketplace. United States conformity to the IFRS has been met with delays and obstacles in recent years, however. As of present day the SEC has not announced an official date for a complete switch from GAAP to IFRS. Road maps for the conversion by the SEC in 2008 estimated completion dates in the
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