In November 2008, the Securities and Exchange Commission (SEC) issued a proposed roadmap for making the transition from the United States Generally Accepted Accounting Principles (US GAAP) to the International Financial Reporting Standards (IFRS). At the time, the SEC did not have enough information to decide if IFRS should be incorporated for American public companies.
On Wednesday, the SEC "voted unanimously to issue a statement affirming support for a single set of high-quality globally accepted accounting standards as well as ongoing consideration of incorporating IFRS into the financial reporting system for US issuers," according to WebCPA.com. While this is still not a concrete decision to incorporate IFRS into the US system, it is very significant because it shows America's willingness to establish standards with foreign countries, which may help greatly in analyzing financial statements. In fact, it may increase investment in America as well as American investment abroad due to standardization that most developed nations will be familiar with, thus creating more globalization and perhaps higher profits for all.
Of course, the SEC is determined to also help improve the current IFRS with the help of its Financial Accounting standards Board (FASB) whose suggestions cannot be ignored. There is the fear that since the IFRS is not as complex or detailed as the US GAAP, American investors might not be as protected as they once were.
There is still a long way before any changes are made or incorporated. By 2011, the SEC hopes to finalize a decision as to whether or not IFRS will become the new American standard. Will this mean the end of GAAP? Probably not, as the US will make sure that some of its old standards it deems necessary are added to the IFRS.
- Ruba Ayyat, Marketing
Source: Cohn, Michael. "SeC Votres on Work Plan for Incorporating IFRS." www.webcpa.com. February 24, 2010. <http://www.webcpa.com/news/SEC-Votes-Work-Plan-Incorporating-IFRS-53368-1.html?ET=webcpa:e720:136853a:&st=email>