Mohamad

Acc 222

2 October 2012 a)The International Accounting Board is an independent. London based organization. The Board is responsible to developing and implementing a set of high quality accurate worldwide recognized accounting standards. These standards will be transparent and require relevant information in comparable financial statements. The Board will coordinate with other accounting boards to achieve convergence in accounting standards. b)The stakeholders that might benefit from the use of International Accounting Standards are: 1-Investors, financial firms ,investment bankers ( Goldman Sachs) and stock exchanges (NYSE). This usage will lead to apply comparability among U.S.companies and foreign listed companies at the New York stock exchange and The Nasdaq. 2-Multinational companies:Global companies like Coca-Cola and McDonalds will benefit from the application of these standards because their operations extend worldwide They apply the same standards uniformly. 3-Governments: Securities markets regulators (SEC), and tax authorities (IRS). The European Banking Authority. c) A single set of global accounting standards , particularly as the world is moving closer and closer to a global economy, will provide the world economy with effective, financial transactions .it will bring uniformity to already-existing standards. This will would dramatically

decrease all kinds of risks, fraud and make international business more efficient.With globalization, the barrier to doing business internationally is going to keep lower and lower More than 100 countries already use IFRS; firms of all sizes will increasingly have clients that are doing business both inside and outside of the united states and having unified standards will help everyone(1).Effective ,meaningful comparisons between entities are absolutely critical. Financial statements comparability between two companies, from two different countries but within the same industry, implementing the same standards will enhance transparency and assist their investors and creditors to take more accurate decisions . d) The major obstacles to convergence, especially for The United States are there are some differences in accounting procedures and application resulting from different legal systems and economic factors and sometimes cultures collision .These differences has been existing since the beginning of the industrial revolution. In the U.S.A rules- based standards are the foundation of the financial reporting environment. IFRS are concept-based standards which are adapted to fit different smaller economies in the European Union. These differences has impacted the users like multinational corporations. Other important obstacles are extremely short time frame and magnitude of the changes been dealt with.The last obstacle is that the entreprise costs associated with convergence and or adoption of IFRS to fit the U.S company. e)The United States was strong of its resolve not to adopt IFRS, believing that its rules based standards were superior to the more principle-based standards of the IASB.(2).However,this resolve appeared to diminish around 2002 with the various accounting scandalsinvolving organizations such as Enron.From Late 2007 the SEC adopted rules that permit foreign corporations listed on the U.S stock exchanges (but not US domestic companies) to file ,with the SEC ,their financial statements prepared in accordance with IFRS without the

need to provide a reconciliation to generally accepted accounting principles(GAAP).Finally although there is a view that IFRS will eventually be adopted, the adoption may be couple years away according a timing schedule or road map selected by the SEC. There are also some issues related to the cost to businesses to implement this change, and how principle-based standards like IFRS will fare in the U.S. legal system. The SEC is looking at all those issues, once those concerns are satisfied ,it appears that a move to IFRS is inevitable. f)The convergence process had begun back in 2001 when the International Accounting Standards Board (IASB) was created to establish a process to implement an international accounting process. Next in 2002 the IASB created an agreement to develop the accounting process that would create standards that would work for both British financial reporting as well as international. In 2005 the SEC announced that foreign companies could report financial statements using the IFRS instead of US GAAP .In 2008 The SEC created a roadmap that would explain how and when the IFRS would be implemented into the U.S. financial reporting system. The last joint meeting in London between (FASB) and (IASB) was on April 2011, the Boards provided a report on the progress of their joint convergence work. The SEC will decide sometime in 2011, whether to mandate the use of IFRS and the length of the transition period. On July 13,2012,The SEC released a report providing a clear position noting that a wholesale switch to international standards would strain the resources of U.S. companies and that a stepped transition has more public support. As expected, the SEC released report did not contain a recommendation on whether US public companies should be allowed or required to adopt IFRS for their financial reporting.

Citations: 1. AICPA /www.IFRS.com- International Financial Reporting Standards