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US Perspectives on Implementation of IFRS

Ervin Black, Greg Burton, and Spencer Paul

1. INTRODUCTION The worlds economic environment is becoming increasingly interconnected. The role and relevance of minor nancial markets have grown, highlighting our cross-border interdependence. Multinational corporations are becoming more commonplace. Investors depend on nancial statements, which when built on solid foundations, facilitate ow of capital. As the ow of foreign sources of capital has increased, the need for globally accepted accounting principles has strengthened. International Financial Reporting Standards (IFRS) are uniquely positioned to ll that role. In the United States, long the dominant nancial market of the developed world, Generally Accepted Accounting Principles (US GAAP) are used for nancial reporting. Over the years, US GAAP has become deeply integrated into and become a reection of the US economic landscape. As IFRS continues to push for global acceptance, some within the US are hesitant to join, whereas others seek acceptance of IFRSs widely accepted principles-based standards domestically (US). This chapter seeks to expound upon those responses.

2. HISTORICAL BACKGROUND For many years, countries developed their own accounting standards. They were inuenced by a nations culture, economics, and political inuences (McGee and Bandyopadhyay 2009). US GAAP was created by the Financial Accounting Standards Board (FASB) in 1973 and has since grown to well over three thousand pages (Myddelton 2004). US GAAP, like its foreign counterparts, satises the requirements of the unique business and legal environment of the country it serves. An extensive, rules-based standard ts appropriately with an economic climate like the US, which has been described as litigious in nature (Kroeker 2009). IFRS was created by the International Accounting Standards Board (IASB) in 2001. The IASB is a private organization with no regulatory

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