Accounting Harmonization by 2014?
Accounting Harmonization by 2014?
Accounting Harmonization by 2014?
The Harmonization in the Accounting world, specifically the transition to the International Financial Reporting Standards (IFRS) has been a major controversial topic talked about in the accounting world for the last few years. More recently it has been stressed on whether it can or will be occurring by the 2014 deadline. 113 countries around the world have already adopted IFRS. These countries either require IFRS or are beginning use and allow IFRS in their company. (Backgrounder) The United States is not yet in this group of countries. Although, there are actions being taken to have the United States using IFRS by the year 2014.
International Financial Reporting Standards is not going to be an easy task to accomplish by 2014. The American Institute of Certified Public Accountants (AICPA) has began to realize the amount of money and time that is actually going to have to go into changing the standards of how the entire United States companies are completing their financial statements. They believe that they can help make the transition smoother and easier on the United States companies. They claim they are going to further educate AICPA members, as well, as help accounting educators, textbook authors, related majors, colleges and universities on all aspects of IFRS. They also say they are going to make sure that the voice of United States Certified Public Accountants (CPA) are heard internationally and are not going to be overlooked. They also are going to start to include questions on the Uniform CPA Exam about IFRS. The AICPA are definitely going out of their way to try and help this transition go a lot more smooth and sufficient but at the same time realizing the cost. (Backgrounder)
This is just how one organization is going to help but there are many more costs coming out of this adoption from Generally Accepted Accounting Principals (GAAP) to IFRS. The hardest part is it is going to be the actual work of switching over the financial information to a completely different form. This is where a lot of the time and money from companies are going to go. The man-hours that it is going to take is a lot just in it self. This goes from small companies to large companies. That leads to the training and schooling to teach the workers, managers and anyone else that takes place in completing financial statements. These companies are going to have to learn how to adapt to these new standards. This takes a lot of time, both in training and then in applying that training. That means that there is going to have to be extra auditors and analysts around to check and make sure everything is being done correctly. (Adopting)
This Adoption of IFRS or Harmonization of Accounting Standards does have its costs but what it will do to help the United States companies and investors makes this transition worth the work. With the completion of the adoption of IFRS, the global market, with the United States included, will have one standard for all companies around the world. This universal standard will help investors and companies compare the other companies' financial statements and understand them so they can invest or gain other knowledge for their own purpose. This also protects the investor so they know what they are looking into and can make more valuable decisions when doing business. This now goes to show how the market around the world is going global. Which this will help world resources be better managed by everyone because they will able to follow the same rules and regulations. (Harmonization) Investors from the United States will now have international investment opportunities and can benefit from comparing non-united States companies from United States companies with IFRS. When this global Accounting Standard develops and is in operation it will change the business-financial world, as we know it. (SEC)
2014 is coming quickly and seems that the United States has a lot to work on if IFRS and the harmonization of the Accounting world is going to be in affect by then. If they follow the SEC road map to IFRS I personally think that we have a decent shot at adopting the IFRS standards into United States business market. This is going to take a lot of organization and time from the government, organizations and companies if they want this goal to succeed. Also, the education on this topic is going to have to be introduced very soon to everyone it effects and the one's it will effect in the future. There is too much talking and speculating about this big transition to IFRS but not enough is actually being done to make sure that it is going to work.
IFRS sounds like it is going to help the Unites States in many great ways for the future of business but it's the Americans that I am not sure if they are willing or ready to take on such a task but hopefully the IASB, FASB and the SEC will continue to work towards coming up with a solution in eliminating the differences between U.S. GAAP and IFRS and the Harmonization of the Accounting world.
References
An AICPA Backgrounder." AICPA - International Financial Reporting Standards Resources. Web. 21 Jul. 2010. .
Barth, Mary E. "Adopting IFRS: Costs and Benefits." International Accounting Standards Board. Sept. 2007. Web. 21 Jul. 2010. .
"Roadmap for the Potential Use of Financial Statements." Securities and Exchange Commission. 14 Nov. 2008. Web. 21 Jul. 2010. .
Sankaran, Siva, and Dhia D. AlHashim. "An Accounting Information System for Harmonization." Journal of American Academy of Business, Cambridge 9.2 (2006): 250-256. Business Source Premier. EBSCO. Web. 19 Sept. 2010.
Weber, Cameron M. "Harmonization of International Accounting Standards." All Business. The National Public Accountant. Web. 19 Sept. 2010. .
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