Transition towards ifrs, accounting, Basic Statistics

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Transition towards IFRS

Over the last few years, there has been a tremendous change in the world's capital markets. There has thus been a shift away from the local financial reporting standards and the world is moving towards global accounting standards to ensure comparability between organizations across the globe.  There has been a lot of debate regarding the shift of accounting standards from GAAP to IFRS. In 2007, the Security Exchange Commission issues a release which requested suggestions on whether the US companies should use IFRS or GAAP accounting standards. The US is still using the Generally Accepted Accounting Practices while maintaining financial records. There is a huge debate on how the change is to be bought in the US. There is an option of giving the companies an option to choose between GAAP and IFRS. The other way is to force companies to switch from GAAP to IFRS. The change to IFRS is expected to take another 5 years in the US. Paul Palmer Adrian Randall (2001)

The change from GAAP to IFRS involves a lot of challenges. This change would require a complete transformation by the company, as there are a lot of differences between GAAP and IFRS.  In order to implement this change, it is important for the company to put down a proper action plan for the use of IFRS. A proper strategy must be developed by the company to ensure smooth conversion from GAAP to IFRS.  It would be helpful for companies to hire financial advisors and staff that are proficient in IFRS and would thus be able to ensure smooth conversion for the companies. There would also be a need to upgrade the technology in order to transfer from GAAP to IFRS. All these activities would incur huge costs for the company, especially for the initial conversion. Craig Deegan Grant Samkin (2006)

Companies must prepare themselves for the change to IFRS as that is something that is unavoidable. Eventually a complete change to IFRS is expected. The conversion time from GAAP to IFRS is estimated to be approx 2 years. All companies in the US are expected to shift to US by 2014. 

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