Question

Which of the following is not a concern regarding IFRS adoption by the U.S.?

Multiple Choice

• Need for the U.S. to have strong influence on the standard-setting process and ensure that standards meet U.S. needs.

• Geographic dispersion of standard setters make it unlikely that boards can interact to achieve consensus.

• The high costs to companies of converting to IFRS.

• The fact that many laws, regulations and private contracts reference U.S. GAAP.

Answer 1

Ans: Point 2 is not a concern

United States was one of the original members of the International Accounting Standards Committee ("IASC") and later the International Accounting Standards Board ("IASB"). So US already has a strong influence on the process and many standards are written with their inputs.Most of them are also fairly similar in practice with GAAP. However, the concern is regarding the standards where similar practices are not adapted.

2. Companies applying IFRS, come from varying backgrounds. This results in interpretative differences arising out of varying historical practices.However, the setters can interact with each other and come on conses by following the set procedure of adaption irrespective of base locations. So Geographic dispersion of standard setters is not a concern.

3.Switching from GAAP to IFRS is a costly affair.

4.  IFRS is principles based whereas GAAP is rules based.With the implementation of IFRS, there will be more scope for interpretation with regards to financial statements. This is not something that the U.S looks forward to.