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Gwendolyn Mendoza
Steffen Guenzel
ENC 1102
4 June 2014

Rhetorical Analysis of Potential Adoption of IFRS by the United States: A Critical View

As the world shifts to a global market, where countries trade and conduct business
together to improve political and economical alliances, the issue of global accounting standards
rises. In the U.S. accounting community, accountants discuss the implementation of International
Financial Reporting Standards (IFRS) and whether or not it is beneficial to the United States. In
Potential Adoption of IFRS by the United States: A Critical View, authors Devrimi Kaya and
Julian A. Pillhofer discuss the issue of IFRS conversion in the United States. Kaya and Pillhofer
give a critical view on the implementation of IFRS in the United States, claiming that an
international treaty to oversee the International Accounting Standards Board (IASB) would be a
better solution than adopting IFRS. The author supports this claim by providing information on
the flaws of the current overseer of IFRS, the IASB, and giving financial reports showing little
difference between current U.S. accounting standards and IFRS.
The article was published in 2013 in the academic journal Accounting Horizons, which is
published quarterly by the American Accounting Association (Accounting Horizons).
Devrimi Kaya, which is credited as the corresponding author, is an Assistant Professor at
Friedrick-Alexander University in Nuremburg, Germany. He received his degree in auditing and
taxation from this university, where he was awarded the PhD award of the Hermann Gutman
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Foundation for best doctoral thesis in Economics. Kaya also had experience as an audit assistant
("Dr. Devrimi Kaya."). The other author who contributed to this work is Julian A. Pillhofer. He
is a Senior Associate with Unicredit Bank in Germany. He specializes in policy in the
department of accounting (Julian Pillhofer). Upon further research, no education credentials
was found for Pillhofer.
The authors intended audience is anyone interested in the current debate of IFRS in the
United States. Kaya and Pillhofer also intend for their study to be beneficial for the Securities
Exchange Committee (SEC) and the Financial Accounting Standards Board (FASB) of the U.S
(273). The author intends for this article to open the discussion of IFRS substitutions around the
world and how to create a more harmonious accounting system. This source would provide a
good argumentative source in my research because the authors provide insight on the issue using
logical and ethical appeal to their audience.
Kaya and Pillhofer break up their essays in different sections: Introduction, Literature
Review, IFRS Reporting in the U.S., Monopoly Problems and Standard Setting Efficiency,
Organizational Problems with the IASB, and Conclusion. The way the authors broke down their
essay helps the authors build on previous information stated to help support their claim. It is also
very logical for the authors to write their essay in some sort of timeline/organized fashion to help
their audience contextualize the issue. In the introduction, Kaya and Pillhofer establish their
research space and provide a claim. The introduction then leads into Literature Review, where
the authors give empirical data examining the consequences of adopting an international standard
around the world and giving differences between the current U.S. Generally Accepted
Accounting Principals (GAAP) and IFRS (274). The empirical data used gives the audience
more reason to believe the authors claim. The Literature Review also introduces the audience to
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the current discussion amongst the accounting community about the United States while
introducing the sources being used in later sections.
Kaya and Pillhofer give much of their logical appeal in the Literature Review section of
the article. For example, the authors discuss a study published in 2012 Are IFRS-Standard and
U.S. GAAP-based Accounting Amounts Comparable conducted by M.E. Barth, W.R. Landsman,
M.H. Lang, and C. Williams. In this particular study, after examining the comparability of
accounting information between non-U.S. firms applying IFRS and U.S. firms applying U.S.
GAAP, it was found that the comparability of financial records amongst U.S. firms and non-
U.S. firms is more noticeable after non-U.S. firms mandatorily adopt IFRS (274). The source
refutes the argument that implementing international accounting standards in the United States
would help the comparability of financial records globally. If the current U.S. GAAP is more
practical for comparing records internationally than with IFRS, there is no need to implement
IFRS in the United States. Kaya and Pillhofer uses this source as a support for their claim that
the United States would be better off without the implementation of global standards.
After the Literature Review section, the authors flow into the IFRS Reporting in the U.S.
section. In this section, Kaya and Pillhofer discuss the recent developments of the IFRS and the
analysis they did on current IFRS filers in the United States. The evidence Kaya and Pillhofer
found presents another support to their claim; only 23% of the sample of 903 companies in 2010
actually file IFRS with the SEC (279). The remaining 77% use U.S. GAAP standards when filing
financial records (279). The authors prove that there is reluctance in the adoption of IFRS in the
U.S. helping prove their claim that the current state of accounting standards in the United States
should not be touched. The authors giving their own examination of financial records shows the
intended audience that they have enough knowledge to not only give sources to support their
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claim, but they have some expertise in financial records to properly analyze them. The authors
have appealed ethically to the intended audience.
As part of their conclusion, Kaya and Pillhofer offer a solution to implementing the IFRS.
The authors propose that there should be an international treaty to establish a better structure
and put the IASB on solid ground by agreeing on a legally binding framework (293). In other
words if the IASB who pushes the IFRS agenda had more of a solid framework, there could
possible be some sort of international standard put in place. The solution the authors came up
with provide further support for their claim that the U.S. can do without IFRS. Their solution is
based on predictions by various accounting models. By providing a solution, the audience will
find that the authors have more insight than just accounting. This ethically appeals to the
audience, implying that Kaya and Pillhofer have also background knowledge in law. This is a
false assumption since the authors could have background knowledge of law, but there is no way
to prove that. The only assumption that could be made is that based on the authors profession,
they would only provide logical accounting evidence.
Kaya and Pillhofer provide a strong Aristotelian argument for not implementing global
accounting standards in the United States. The authors only talk about their opposition of the
adoption of IFRS in America They support their argument well, giving a lot of sources to back
their claim and statistics. One of the strengths of this article is the authors own research of
financial records. Since the authors include how they came to their conclusions, their evidence is
more credible than just listing a source taken from another study. Kaya and Pillhofer establish
their authority as accounting specialists. One of the weakest points in the article is when Kaya
and Pillhofer give a solution to the problem. With Kaya and Pillhofers background in solely
accounting, their suggestion of putting a international treaty as a replacement for IFRS could not
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be as credible as someone who has prior experience in international law. Kaya and Pillhofer had
the intention of opening up the discussion of the future accounting standards in America. Their
article ultimately gave support using logical and ethical appeal more than emotional appeal,
which makes the article a better source to include in a research paper.

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Works Cited
"Accounting Horizons." Accounting Horizons. N.p., n.d. Web. 4 June 2014.
"Dr. Devrimi Kaya." Lehrstuhl fr Rechnungswesen und Prfungswesen. N.p., n.d. Web. 4 June
2014. <
"Julian Pillhofer - Spezialist Grundsatzabteilung Accounting - Unicredit Bank AG." XING AG.
N.p., n.d. Web. 4 June 2014. <>.
Kaya, Devrimi, and Julian A. Pillhofer. "Potential Adoption of IFRS by the United States: A
Critical View." Accounting Horizons 27.2 (2013): 271-99. Web. 4 June 2014.