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The US should wasting time and adopt IFRS immediately - Essay Example
Finance & Accounting
Pages 10 (2510 words)
US GAAP – IFRS Convergence Introduction Over the past 15 years, many accounting controversies and scandals have caused financial turmoil and resulted in the bankruptcy of several major firms. In response to these events, the IASB (International Accounting Standards Board) began developing the IFRS (International Financial Reporting Standards) to provide transparency and comparability for investors across the world…
The US GAAP is the accounting standard followed by all companies registered in the United States. Doherty (2008) estimates that the US will not be able to adopt the IFRS completely before 2015. As a result, both the FASB (Federal Accounting Standards Board of the US) and the IASB have been working to achieve convergence between the two standards. However, this convergence exercise has been ongoing for several years as related agencies including the FASB, IASB, SEC and the general industry debate on the pros and cons of specific rules and regulations. This paper provides a critical review on whether the US should abandon the US GAAP and adopt the IFRS with immediate effect. This analysis describes both the pros and cons of this decision and explains the factors, which either encourage or inhibit the early convergence between the two standards. The path to convergence The first step towards achieving convergence between the US GAAP and IFRS was initiated by the Norwalk Agreement in 2002, under which both governing bodies pledged their commitment towards the goal of convergence and agreed to realize it by the year 2008. ...
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