International Financial Reporting Standards Come to US

International Financial Reporting Standards... Coming to the U.S.

Owners and CFOs of privately held companies, take note: In November 2008, the SEC released its proposed roadmap for the adoption of International Financial Reporting Standards (IFRS) in the U.S. At a joint meeting earlier this month, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) reaffirmed their commitment to improve both IFRS standards and U.S. generally accepted accounting principles (GAAP) and to bring about their convergence.

While a new administration, ongoing economic issues, and responses to the proposed roadmap have left some uncertainty as to the final timetable for adoption, we believe that it is inevitable, and in the ultimate best interests of investors and businesses.

What are IFRS? A single set of globally-accepted, high quality accounting and financial reporting standards. In simple terms, they are principles-based, whereas GAAP is rules-based, and much more extensive. This will be much more than a technical accounting issue, and could significantly affect a company’s day-to-day operations, with anticipated changes in how to account for revenue recognition, leasing, consolidation, financial instruments, valuation of inventory and fixed assets, debt and equity, to name just a few.

We encourage you to become informed on this issue, to consider steps you can take now to be poised to adapt to ongoing change, and to monitor new developments that may impact your business. As always, we will be glad to discuss your specific situation.

Note: The information in this article is meant to raise awareness of the topic addressed and should not be considered tax advice. It is always important to consult a tax planner prior to engaging in actions that may have tax consequences.