The Economic Effects of IFRS Adoption

Investigating the Expected Benefits

Barry Jay Epstein, PhD, CPA

The SEC has waived reconciliation to U.S. GAAP for foreign private issuers (that is, foreign companies that register in the united States) that prepare financial statements, filed on Form 20-F, in full compliance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). It has proposed a road map that—if followed by the new SEC leadership—could mandate adoption of IFRS beginning in 2014. Taken together with the rapidly growing pace of IFRS adoption by other influential countries (e.g., Canada, which will officially switch from Canadian GAAP—a near-twin of U.S. GAAP—to IFRS by 2011), this portends a potential worldwide embrace of IFRS over the next few years. The highly touted U.S. GAAP–IFRS convergence project, while still moving forward, will soon be eclipsed by these other events. While it is by no means certain, if the SEC road map comes to fruition, it will have consequences that will be felt by accountants in the United States.