International Accounting Standards and Bonus Compensation The International AccountingStandards Board (ww.ifrs.org) is a London-based independent organization that develops and interprets International Financial Reporting Standards (IFRS). The mission of the IASB is to develop asingle set of high-quality, globally accepted accounting standards. About 150 countries throughoutthe world either permit or require IFRS for publicly held companies in their country. The U.S.continues to use generally accepted accounting principles (GAAP) as developed by the U.S.-basedFinancial Accounting Standards Board (FASB). The FASB, under the guidance of the SEC, hasdeveloped a plan in which the FASB and the IASB work together to complete a convergence ofIFRS and GAAP. The timetable for convergence is not firmly set, but many believe it may be onlya matter of time before U.S. firms will be using IFRS or something very much like it. Some of thenotable differences between GAAP and IFRS are that IFRS does not permit LIFO valuation ofinventory (GAAP does), and IFRS does permit market value treatment of certain long-lived assets(GAAP does not). Experts note that a move to IFRS will certainly affect U.S.-based firms in termsof corporate taxation, international transfer pricing (Chapter 19), investment strategies (Chapter 12),and the evaluation of the performance of foreign operations and the managers of those operations(Chapters 18 and 19).Required How would a move from GAAP to IFRS likely affect the development of compensation plansin U.S.-based firms?
International Accounting Standards and Bonus Compensation The International Accounting
Standards Board (ww.ifrs.org) is a London-based independent organization that develops and interprets International Financial Reporting Standards (IFRS). The mission of the IASB is to develop a
single set of high-quality, globally accepted accounting standards. About 150 countries throughout
the world either permit or require IFRS for publicly held companies in their country. The U.S.
continues to use generally accepted accounting principles (GAAP) as developed by the U.S.-based
Financial Accounting Standards Board (FASB). The FASB, under the guidance of the SEC, has
developed a plan in which the FASB and the IASB work together to complete a convergence of
IFRS and GAAP. The timetable for convergence is not firmly set, but many believe it may be only
a matter of time before U.S. firms will be using IFRS or something very much like it. Some of the
notable differences between GAAP and IFRS are that IFRS does not permit LIFO
inventory
(GAAP does not). Experts note that a move to IFRS will certainly affect U.S.-based firms in terms
of corporate
and the evaluation of the performance of foreign operations and the managers of those operations
(Chapters 18 and 19).
Required How would a move from GAAP to IFRS likely affect the development of compensation plans
in U.S.-based firms?
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