Moving from GAAP to IFRS
As accounting standards converge towards a single global norm, the International Financial Reporting Standards (IFRS) continue to gain steam. They are slowly but surely becoming the preferred means of equalizing numbers speak across borders. The general feeling from investors, says a report from the Association of Chartered Certified Accountants (ACCA), is that the United States will eventually adopt IFRS. Exactly when the SEC will make this determination remains unclear, though it now seems inevitable.
But the transition won’t be seamless — or cheap — according to the ACCA report, “IFRS in the US: The Investor’s Perspective.”Survey respondents believe that moving from the current standard, U.S. Generally Accepted Accounting Practices (GAAP), to IFRS will require a “substantial investment in human capital” from companies, which will on average need four-and-a-half years to make the switch.
Further dampening excitement is the fact that 62% of investors are “not confident” in their ability to compare financial figures between GAAP and IFRS. Regardless of the bumps in the road, however, U.S. investors expect the transition to take place and “are more likely than not to see this as a good thing for the U.S. economy.”