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Derrick B Stark, CPAFebruary 17, 2012

Dec. 5, 2011:SEC Chief Accountant indicates the SEC staff is months from completion of a final report for the commission to make a decision on IFRS.

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The number of U.S. public companies waiting on the SEC companies waiting on the SEC to support adoption before implementing IFRS statement preparation.

1. FASB|IASB Complete Work on Memorandum of Understanding Projects (“MOU”)

a. Revenue Recognitiona. Revenue Recognitionb. Leasingc. Financial Investmentsd. Insurance

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2. Incorporate IFRS into U.S. GAAPa. IASB Handles New Projectsb. FASB Consults in Development and Evaluates

“Suitability” for U.S. GAAP (Name Retained)3. FASB Evaluates Remaining Differences Between

U.S. GAAP and IFRS.

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FASB, IASB, Chiefs Agree New

Convergence Convergence Model is Needed.

6- Journal of Accounting, 12/6/2011

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• IFRS/US GAAP Comparison -http://www.pwc.com/us/en/issues/ifrs-reporting/publications/ifrs-and-us-gaap-similarities-and-differences.jhtml

• IFRS Foundation – www.ifrs.org• Financial Accounting Standards Board –

www.fasb.org• AICPA IFRS Resources – www.ifrs.com

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• Stark, Derrick. “Why IFRS Matters Now” SCACPA CPA Report. 2nd Quarter, 2011.

• Stark, Derrick. “Getting from Point GAAP to Point IFRS” SCACPA CPA Report. 3rd Quarter, 20112011.

• Stark, Derrick. “Will the United States Ever Accept IFRS?” SCACPA CPA Report. 4th

Quarter, 2011.

Reprinted with permission from The CPA Report, published by the South Carolina Association of CPAs

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Derrick B Stark CPADerrick B Stark, CPAMiraVista, LLC

803.462.9959 x 200derrick@miravistallc.comwww.miravistallc.com

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South Carolina CPA Report 19(888) 557-4814 | www.scacpa.org

Over 120 countries currently permit or require financial statement reporting using

International Financial Reporting Standards (IFRS). Many more are currently developing or implementing IFRS adoption. While IFRS ma�ers now to U.S. companies that have foreign reporting requirements, the United States is largely seen as a major hold out in the global acceptance of the international standards. According to the latest AICPA IFRS Readiness Survey, 76 percent of public companies are waiting for the SEC to support adoption before implementing IFRS statement preparation and many have not yet acquired the expertise they will need to do so. All of this begs the question, will the US ever accept IFRS?

At a glance, IFRS, a principles-based set of standards, seems to contradict the revered objective of comparability baked into U.S. GAAP. The flexibility necessary to foster broad acceptance leaves open the door for wider interpretation and varied results. Adopting IFRS, moreover, seems like an about face to the post-Enron deluge of specifics in our rules-based system.

Terry Grayson-Caprio, a partner at KPMG LLP in Greenville, thinks the gap between the principles-based

IFRS and rules-based U.S. GAAP is narrowing. While Grayson-Caprio is a fan of principles-based standards, she acknowledges, "They [IFRS] are changing to become more rules-based."

In addition to more specifics in IFRS, broadly accepted interpretations by practitioners will aid preserved comparability. "Companies establish internal policies within the [IFRS] principle, and the companies have to be consistent from year to year," according to Grayson-Caprio.

Many of those internal policies naturally find their genesis in the copious amounts of U.S. GAAP literature and historical practice. As a result, the professional judgment of the internal policy drafters, financial statement preparers, and auditors is expected to smack of U.S. GAAP except for the places where there are direct contradictions. Thus, comparability between companies is likely preserved at a practical level in the United States even under IFRS.

Assuming that IFRS does gain some traction by the authoritative accounting bodies here, one cannot help but wonder how much comparability abroad is likely given contradiction between flexibility and comparability.

In an article co-authored by University of South Carolina professor Timothy Doupnik, research suggests that, even in those countries that have implemented IFRS, cultural differences among nations can lead to materially different interpretations of the standards (h�p://www.journalofaccountancy.com/Issues/2009/Feb/IFRSBeyondtheStandards). Words like "probable" have very different meanings to preparers based on national culture and values, and as such, recognition and disclosure will vary significantly based on locale regardless of the common standards. Perhaps, then, a single set of high quality accounting standards does not necessarily provide the global comparability we pursue.

The destiny of IFRS in the United States may be that of soccer. Sure it has a loyal following in America among those with a reason to participate, but Hank Williams, Jr. may never wail, "Are you ready for some...futbol?" n

Derrick B. Stark, CPA, is managing

member of ClaraVista LLC, a

reimbursement and consulting

firm serving home medical

equipment suppliers throughout

the United States. Derrick’s areas of

expertise include data analytics and

application development. Derrick can be reached at

derrick@claravistallc.com.

by Derrick B. Stark, CPASCACPA member since 1996

Will the UNITED STATES Ever Accept IFRS?