Since 2008, the FASB and the IASB have been working on convergence of U.S. GAAP and IFRS. As expected, the project has sparked controversies — particularly in the United States, where many preparers believe U.S. GAAP is the gold standard of accounting rules and should remain intact.
But the international rules have steadily gained U.S. support. In 2007, the Securities and Exchange Commission allowed private foreign issuers to report their results under IFRS without reconciling them to U.S. GAAP. A year later, the American Institute of Certified Public Accountants recognized the IASB as a standard-setter, which in effect allowed U.S. auditors to express opinions on financial statements prepared using IFRS. Meanwhile, at least 120 countries have signed up to replace their local GAAPs with some version of IFRS, and the SEC is contemplating doing the same in the United States.
Still, despite the increasing acceptance of the international rules, particularly among large organizations, misconceptions about them persist. Here, accounting experts expose seven of the most common ones:
Myth No. 1: IFRS is a principles-based set of standards, while U.S. GAAP is rules based.
Myth No. 2: U.S. GAAP is more rigorous than IFRS.
Myth No. 3: IFRS can be easily manipulated by management.
Myth No. 4: Convergence is the same as adopting IFRS.
Myth No. 5: If the United States doesn't adopt IFRS, American companies can return to the old ways of accounting.
Myth No. 6: Since the IASB is a foreign organization, U.S. concerns are not well represented on the board.
NA
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article