Issues in acceptance of international financial reporting standards by the United States

Answer 1
Issues in acceptance of international financial reporting standards by the United States
Introduction
An article written by Mr. Alex Bogopolsky concludes that United state is reluctant to the
adoption of International financial reporting standards (IFRS) in place of United State generally
accepted accounting principles (US GAAP) (Bogopolsky 2015). IFRS are issued by international
accounting standards board. Various countries of the world provide their acceptance for the
adoption of these standards in place of the standards issued by the country’s accounting standard
issuing authority. On the other hand, United States seems to be far away from the acceptance of
these standards in place of their US GAAP. This report is written for making a critical analysis or
the view explained above in the article of Mr. Alex Bogopolsky.
Benefits to the country come with the adoption of IFRS
IFRS help a country in copping up with the other countries already accepted these standards in
helping the investors in making various comparative analyses with the financial statements of the
organization. If a united state will adopt the IFRS in place of US GAAP then the country will get
following advantages,
1. Adoption of these standards results in more comparability of financial statements. If a
country adopts these standards then country’s organization’s financial statement will
become comparable to the financial statements of organizations of other countries which
already adopted these standards (Hail, Leuz & Wysocki 2010). In the same way, if
United States will adopt the IFRS in place of US GAPP then country’s organization’s
financial statement will become comparable to the financial statements of organizations
of other countries which already adopted these standards.
2. More comparability of financial statements helps in confidence-boosting of the investors
regarding the accounting standards and various auditing standards used by the
organizations in the country (Parker & Nobes 2012).
3. Multinational companies operating in the country will become free from the preparation
of financial reports by following various standards.
4. In present taxation authorities of the country facing trouble in profit calculations
regarding the multinational companies operated in the country. This trouble of tax
authorities of the country will also reduce by the adoption IFRS in the country. It is
expected that the adoption of International standards will result in abolishment of the
trouble of tax authorities incurred for calculations of profit earned by such companies in
the other countries not following US GAAP.
5. In addition to this adoption will help the countries operated in the country in getting
global ratings from the global credit rating agencies.

Costs to the country come with the adoption of International financial reporting standards
There are various advantages of adoption of IFRS for the country like the United States because
in this country there are various multinational companies and international investors. However,
the country is not in favor of the adoption of IFRS because of some huge costs. Some of them are
discussed below,
Cost of control
IFRS are issued and governed by an international body, international accounting standards board.
On the other hand, US GAAP is issued by United States security exchange commission. United
States security exchange commission is a body under the control of the country and also prepares
US GAAP on the basis of own discretion without any international interference. However,
adoption of IFRS’s in place of US GAAP’s will inferior the control of the country on the
standards on which organization preparing financial statements in the country (Ehoff & Fischer
2013).
In addition to this, the standards for preparation of financial reports will issue and amend by the
international accounting standards board i.e. international body and not the United States security
exchange commission i.e. country’s internal body.
Political issues
Adoption of IFRS in place of US GAAP will also create political issues in the country. In
addition to this sometimes IFRS may become biased for any country and unfavorable to other.
Adoption of IFRS will result in facing such partiality of the international accounting standards
board. This also has the possibility of preparation of unfair accounting standards.
Financial issue
The change in accounting standards of a country involves a huge cost for the companies in the
country for training purposes of the employees for teaching and making them expert in dealing
with the new accounting standards. In the same way, if United States will apply new accounting
standards i.e. IFRS in place of US GAAP then companies of the country will face this expense.
In addition to this, change in accounting standard to IFRS in place of US GAAP will require
huge expenses of the country. As per the estimation United states will need to make expenses of
five trillion in the adoption of IFRS in place of US GAAP (Massoud 2009).
Conclusion
Hence this discussion concludes that the US is in favor to have single accounting standards over
the globe but not in favor of losing control on the power of formation of accounting standards,
making huge expenses and facing political issues. Hence the country is resisting in the adoption
of IFRS in place of US GAAP.

Works Cited
Bogopolsky, A 2015, Does IFRS have a future in the US? IFAC, viewed 28 April 2018,
<https://www.ifac.org/global-knowledge-gateway/business-reporting/discussion/does-ifrs-have-
future-us>.
Ehoff, JC & Fischer, D 2013, 'Why the SEC is delaying adoption of international financial
reporting standards.', he International Business & Economics Research Journal, vol 12, no. 2, p.
223.
Hail, L, Leuz, C & Wysocki, P 2010, 'Global Accounting Convergence and the Potential
Adoption of IFRS by the United States: An Analysis of Economic and Policy Factors',
Accounting Horizons, vol 24, no. 3, pp. 355-394.
Massoud, M 2009, ' The Road to International Financial Reporting Standards (IFRS):
Opportunities and Challenges', Claremont McKenna College, Claremont.
Parker, R & Nobes, C 2012, Comparative International Accounting, Pearson Education Limited,
Essex, England.
Question 2