Globalization of world markets is driving demand for uniform financial reporting standards. The most widely accepted set of accounting standards currently are the International Financial Reporting Standards (IFRS) issued by the independent London-based International Accounting Standards Board (IASB). To date, more than 100 countries, including the European Union member states, either use or plan to adopt a version of IFRS rules.
The IFRS fever has caught on in the United States, too. In 2007, the Securities and Exchange Commission (SEC) released two policy proposals related to the convergence of global financial reporting standards. One sought comment on a rule that would permit foreign companies that issue securities in U.S. markets to prepare their financial statements in accordance with IFRS. The SEC also asked for comment on a concept release that proposed letting U.S. companies prepare their financial statements using either IFRS or U.S. Generally Accepted Accounting Principles (GAAP).
Allowing IFRS to be used in the United States is controversial. Proponents argue that it would allow investors to compare financial statements of companies worldwide seamlessly, at a lower cost and with less risk of error. Opponents believe IFRS are not as high-quality as GAAP and that permitting their use would entail costly retraining by U.S. accountants and auditors as well as an overhaul of university curricula. Critics also contend that there would continue to be a severe lack of consistency in the implementation, interpretation and enforcement of IFRS standards worldwide.
The Council has not taken a position on the adoption of IFRS for the United States, but has worked to help members gain an understanding of different perspectives on the issue. Please click on the links below to read material from or commissioned by the Council that discusses international convergence.