Common Misconceptions About IFRS
<< Back to IFRS: It's Not as Hard as You Think
CPAs trained in U.S. GAAP will need to become retrained in IFRS.
Retraining is not a requirement. CPAs are used to coping with frequent shifts in accounting rules and standards, although IFRS poses far more than the customary extent and number of changes.
There’s plenty of time.
The debut of a global accounting standard is a case of when, not if. Converting to IFRS will require possibly time-consuming changes to accounting systems and related processes. The luxury of waiting is fast disappearing. And if your company or your clients’ companies have foreign subsidiaries, those subsidiaries are determining the IFRS policies today that you’ll live with tomorrow.
IFRS conversion is just an accounting exercise.
IFRS-related changes will have ripple effects across the entire business organization, beginning with accounting and rapidly migrating into essential changes in business processes and systems.
IFRS rules are “principles-based” and can be interpreted more broadly.
With U.S. GAAP, the lines of practice are more clearly drawn, with more bright lines and more application and implementation guidance than IFRS provides. But under IFRS, with less interpretive and application guidance, companies must look at the substance of transactions and then apply IFRS principles. CPAs must first understand the concepts underlying IFRS and then apply sound judgment to determine the most suitable interpretation—another argument in favor of extensive training and education on the topic.
With the adoption of IFRS, U.S. regulators will lose their power.
While the IFRS standard-setting body, the International Accounting Standards Board, is based in London and has board members from all over the world, neither it
nor FASB in the United States is a regulator. These bodies are standard setters. The regulator in the United States is the SEC, which will continue to exercise its oversight role over companies that choose to register in the U.S. market.
IFRS is merely a compliance exercise.
The migration from U.S. GAAP to IFRS is an opportunity for businesses to review, streamline and improve all aspects of accounting, reporting and related compliance and information technology processes. Wise management teams will view these matters as a chance to make quantum improvements across the enterprise.
