Question

What will happen if IFRS rules are mandated in the US? Will greater flexibility and opportunity to use more professional judgment in constructing financial statements be positive or not?

Answer 1

What will happen if IFRS rules are mandated in the US?

There has already been lot of literature avaialable on the internet regarding the issue, below I am writing down some bullet points of the effect of IFRS rules in USA:

• The PUBLIC companies will have to restructure their accounting and taxation reporting
• There would be no effects of private, small and non-profit organisations who shall continue to use the existing US GAAP
• By adopting IFRS, a business can present its financial statements on the same basis as its foreign competitors, making comparisons easier.
• companies with subsidiaries in countries that require or permit IFRS may be able to use one accounting language company-wide.
• Companies also may need to convert to IFRS if they are a subsidiary of a foreign company that must use IFRS, or if they have a foreign investor that must use IFRS.
• Companies may also benefit by using IFRS if they wish to raise capital abroad.  
• Compliance costs would increase

Will greater flexibility and opportunity to use more professional judgment in constructing financial statements be positive or not?

It will be positive because IFRS are not rule based like US GAAP and leaves many areas upon the judgement of the preparer and auditors of the accounts.