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The Inevitable Move to IFRS?

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The issue of convergence between US Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) has been developing for some time. Issued in August 2007, SEC Concept Release 33-8831 addressed the question of whether US companies should be allowed to prepare their financial statements in accordance with IFRS. An SEC ruling issued in December 2007 allows foreign private companies to use IFRS without reconciling to US GAAP. Unless the requirement to move from US GAAP to IFRS applies only to publicly traded companies, there will be two GAAPs: a big GAAP and a little GAAP. US financial accounting standards setters have avoided this problem for more than 50 years. If the SEC requires US public companies to move to IFRS, this would not change the status of the Governmental Accounting Standards Board (GASB) or GASB's responsibility to set GAAP for governmental entities.

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