Mr Turley, Chairman and CEO of Ernst and Young in his report in the Wall Street Journal, dated Nov 2007 has expressed his support for the SEC to set a certain date for the shift to IFRS.
Currently US companies follow the US GAAP as the financial accounting standards. The SEC has already allowed non-US companies to file US financial reports under the IFRS. They are wondering whether to allow the US companies to shed its former accounting standards (US GAAP) in lieu of the international IFRS.
A single set of high quality global standards have a number of benefits
(1) Greater Efficiency within companies
(2) Savings on legal and accounting experts
(3) Benefits for the investors: IFRS would prove to be a new level of reliable source for the investors.
(4) IFRS would provide a readily available foundation for capital markets, which could promote investments in emerging markets.
IFRS is becoming the dominant global language for the business. Many countries have already set dates for the change and according to the writer of this report, US too should set a date so that the companies can make necessary legal and regulatory changes for the shift.
I find the article very interesting and am surprised that despite the fact that the United States are slowly shifting from GAAP to IFRS, the first one is still predominant. Unification of the accounting standards would be beneficial to global economy and could effectively increase transparency. As of now, GAAP may be interpreted differently by various parties therefore could cause many discrepancies and hidden facts. A main difference between the two accounting standards is the fact that the US GAAP leaves much room for interpretation in terms of the capital and capital maintenance during the recession while IFRS includes more variables for justification within similar global scenario. If collided with IFRS it could be difficult for the companies investing in foreign markets to remain transparent, or simply credible. The SEC should accelerate the shift as the major US trade partners, such as the EU, China, and Brazil, have already shifted or are during its process.