The big question: IFRS and US adoption
Tuesday 23 August 2011 - by Robert Hodgkinson
With the eyes of the world on the US economy, and a decision expected by the end of 2011 by the US Securities and Exchange Commission as to whether it will adopt International Financial Reporting Standards, it is no surprise that this is one of the hottest topics in the world of accountancy.
But despite the positive signs, there are still many sceptics in the US. Some are suggesting US GAAP is not broken and should therefore not be fixed. The uncertainty is doing little good for the continued spread of IFRS around the world.
Currently, there are around 120 countries that permit or use IFRS and this number is likely to increase to around 150, according to the IASB
In this climate, the SEC decision is critical. For the world's largest capital market to decide to adopt IFRS would clearly have a profound effect on the global financial reporting environment, especially if that decision were to prompt Japan - another significant global capital market - to do likewise.
There are also several other countries currently sitting on the fence that would most likely also adopt IFRS if the US does. Whilst there is an economic component to the decision - adoption might mean short term costs, but would lead to increased international comparability and long term savings - this is ultimately a political decision.
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