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IFRS (International Financial Reporting Standards) – The tip of the iceberg?

November 16, 2008 by Wayne Schulz

Have you heard about the International Financial Reporting Standards? These International reporting standards have been relevant to the United States since FASB issued the Norwalk Agreement in  2002 which stated their commitment to rules for universal financial reporting that is accepted across countries.

There are nearly 100 countries requiring or allowing publicly held companies to prepare financial statements using IFRS principles.

In 2005 the European Union required over 12,000 companies listed on an EU-regulated stock exchange to adopt IFRS when they prepare consolidated financial statements. Canada is planning to require IFRS starting in 2011.

Where GAAP and IFRS Differ

The Financial Accounting Standards Board and International Accounting Standards Board are working to close the gap (pun intended) between IFRS rules and GAAP/IASB rules. Currently the following differences exist:

  • IFRS does not permit Last In First Out (LIF) as an inventory costing method
  • IFRS uses single-step method for impairment write-downs rather than two-step used by GAAP
  • IFRS has a different probability threshhold and measurement objective for contingencies
  • IFRS does not permit curing debt covenant violations after year-end
  • IFRS guidance regarding revenue recognition is less extensive than GAAP and contains less industry-specific guidance.

When Will This Affect US Companies?

The earliest expected adoption dates for large US public companies to convert financials to IFRS is 2013 which is the year which all major capital markets are expected to operate from one set of accounting standards.

Given the worldwide meltdown of credit markets it’s reasonable to expect that many new rules and regulations will be introduced over the nexte several years. The  IFRS may further be updated to address the perceived weaknesses in the existing reporting guidelines.

Mike Morper of Sage Software has a post that addresses how Sage MAS 90 and 200 will be updated to conform to any new reporting guidelines. He provides assurance that the product team at Sage Software is working on making sure the software conforms to any new reporting rules.

via: Mike Morper – IFRS Roadmap coming this week

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Filed Under: Sage software Tagged With: International Financial Reporting Standards, MAS90 IFRS, mike morper, Sage software

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About Wayne Schulz

Wayne Schulz is a Sage 100 Consultant located in Connecticut. He has worked with Sage 100 since 1986 and provides advanced support to companies located throughout the United States. If you are experiencing an issue with Sage 100 and would like to schedule a support session - please request assistance here or call 860-657-8544.

Comments

  1. hatrevivalist
    Darla Sycamore says

    November 17, 2008 at 12:59 pm

    The SEC posted its IFRS Roadmap (in the proposed rules section) on Friday night – no news release. We are committed in Canada to IFRS conversion in 2011. Actually one has to do most of the work prior to 2010 so that the 2010 comparative figures can be worked out. The Roadmap will have a 90-day comment period.

    I write a blog on IFRS conversion issues and news – IFRSCanada:The devil is in the details. Canadians will be a test case – also, India and Brazil and now Mexico.

  2. hatrevivalist
    Darla Sycamore says

    November 17, 2008 at 7:59 am

    The SEC posted its IFRS Roadmap (in the proposed rules section) on Friday night – no news release. We are committed in Canada to IFRS conversion in 2011. Actually one has to do most of the work prior to 2010 so that the 2010 comparative figures can be worked out. The Roadmap will have a 90-day comment period.

    I write a blog on IFRS conversion issues and news – IFRSCanada:The devil is in the details. Canadians will be a test case – also, India and Brazil and now Mexico.

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