Staying Competitive: Insight Into the Convergence of US GAAP and IFRS Accounting Standards
Open Access
- Author:
- DeMarzio, Joseph Christopher
- Area of Honors:
- Accounting
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Orie Edwin Barron, Thesis Supervisor
Orie Edwin Barron, Thesis Supervisor
Xueyi Sun, Faculty Reader
Orie Edwin Barron, Thesis Honors Advisor - Keywords:
- convergence
US GAAP
IFRS
accounting standards - Abstract:
- The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are currently working to converge their separate accounting standards in order to improve the consistency of financial reporting and smooth away some of the big differences that exist between the two sets of standards. At the moment, a significant number of standards are slated for introduction during 2011. Some of these standards include financial statement presentation, revenue recognition, leases, financial instruments with characteristics of equity, and insurance contracts. The current dilemma revolves around the decision of introducing these new accounting standards immediately through what we have come to know as the “Big Bang” approach, or introduce the new standards in a phased or more commonly known as a “Roll Out” approach, which leads us to ask the question: “What is the best way to implement the convergence of US GAAP and IFRS convergence?” Throughout this thesis the question at hand will be answered by providing insight into the most efficient and effective way to implement convergence. In recent years, there has been a lot of debate in regards to the best way of implementing the convergence of US GAAP and IFRS Accounting standards. Many financial statement users have argued that the impact of simultaneous adoption will be overwhelming and cause great confusion to investors. On the other hand, there are those who believe that a drawn out approach to implementation will require too much of a company’s time and divert attention from more important business activities. Regardless of which method of implementation is adopted, change will take place, as convergence of US GAAP and IFRS is inevitable in today’s global business environment. United States companies must adopt and accept convergence in order to stay competitive and maintain their reputation for quality reporting they have worked so hard to achieve. A number of companies have already gained an advantage with an early to start to convergence. In determining the best method of implementing convergence, there are many factors and stakeholders that must be identified and considered. Furthermore, not only should the short-term effects be included this decision, but the long-term effects as well. This thesis will take a look back in history, analyzing times of change that have fell upon the United States in the past and identify how our country has adapted and dealt with such challenges. This information will be utilized in determining the best course of action for convergence.