IFRS and US GAAP: evaluating the United States proposed move to a new set of Accounting; standards

Countries around the world are converging toward the adoption of a single set of accounting standards, International Financial Reporting Standards or IFRS. Many developed and industrialized nations have made the move to IFRS. One major holdout in this process has been the United States of America. Experts have considered United States Generally Accepted Accounting Principles or US GAAP to be the set of accounting standards that produce the highest quality financial statements. The creation of the Securities and Exchange Commission and the independence of the Financial Accounting Standards Board has had a significant effect on the perceived quality of US GAAP. Recently, the Securities and Exchange Commission has issued a proposing release that, if adopted, will present a significant step towards the US's move to IFRS, perhaps as soon as 2010 for some companies. There are some important issues that need to be considered prior to the US making the change to US GAAP. Is the United States ready to change? Educating preparers, investors, and other stakeholders about the new set of standards will be critical and most likely will have high initial costs. Security market regulation is key to adoption and application. Currently, there is a lack of consensus regarding how to best deal with issue. Auditors and the audit profession will need to adapt to a more principle-based set of standards. Although the SEC's proposing release pushes the US toward the adoption of IFRS, it is unclear that the US is ready to toward IFRS must be made more gradually and the International Accounting Standards Board and the Financial Accounting Standards Board will need to continue to work together to be able to create a converged set of quality standards that will emulate the strength and detail of US GAAP and still appeal to compaines around the world.