By 2010, foreign companies will be able to file on U.S. Stock Exchanges using IFRS standards.

What are some of the challenges facing the accounting profession, and how do you see them affecting you in the future?

Just do response each posted # 1 to 3 down below only

Posted 1

Foreign companies filing on the U.S. stock Exchange using IFRSstandards could be very challenging. The IFRS is used by many countries,however the United States utilizes the GAAP. If you’ve been todifferent countries you may have noticed the difference in culturecompared to the United States. The IFRS is based on principles and theGAAP is based on rules.

The first challenge that concerns me is, will the IFRS principlesthat do not abide by the GAAP rules suffer the same consequences? Whatwill happen when standards collide? Transitioning from one businessculture to another is hard. Actions taken due to personal beliefs orethical reasons, are not always what is best for the company.

The second challenge is inventory. Companies in the United States areallowed to use the last in first out (LIFO) method which isunacceptable in other countries. As a result of this, reports may beinaccurate.

The last challenge would be accounting for shares. How will thiseffect shareholders? What currency will be used and does it impactshareholders from different countries. They would want to know if therecurrency has increased or decreased in value because of this change.

I’ve traded in the stock market before. Trading in the U.S. marketand Forex is very different. Investors would have many questions. As anindividual pursuing a degree in accounting, I could see this becomingconfusing and causing frustration. It is always best to give directguidance with no room for guessing. Enforcing one standard makes iteasier for the accountant to review financial documents.

Posted 2

Afterreading the required text about countries adopting IFRS, I understandwhy many jurisdictions are already using these standards. As stated inthe text many countries do business across their borders, no longer byway of just imports and exports. World markets are becoming increasinglyintertwined (Keiso, Weygandt, Warfield, 2018). American based companieslike Microsoft, Apple, and Facebook have investors that are located inother countries and they want to make sure that their money is respectedand holds the same value that they would get if they lived here in theUnited States.

I foresee quite a few challenges to the accounting profession if theUnited States adopted these standards. First, companies in othercountries might value their assets differently. Some might value basedon purchase price, fair market vale or purchase price minusdepreciation. Second, companies In different countries might put amonetary value on things that another company might not, like tangibleand intangible items. Third, companies might have subsidiaries and theymay add all revenue together or keep it separate. These are just a fewchallenges that come to mind immediately, I can assure you there aremore.

if we change our reporting to adopt the IFRS it would mean unlearningour GAAP, and getting on board with a completely new set of standards.Accountants might make mistakes in reporting because of the change inreporting standards. As far as who does the comparison to US GAAP andIFRS On the exchange, it should be a new committee formed, that way theburden is not cast onto the user but the new oversight committee thatwill be formed making it a fair process and they can publish quarterlyreviews. That can be viewed by all online.

Posted 3

Ilearned a lot this week about IFRS through the textbook readingassignments. My opinion would be that the differences in IFRS and GAAPare monumental enough that the non-accountant may not realize that“foreign companies’ financial statements may be prepared using adifferent set of accounting standards than companies use in the UnitedStates.”¹ In my opinion, the added burden for users tointerpret financial statements will cause confusion with some companiesusing IFRS and others GAAP. The need for the educated accountant tointerpret these differences is becoming increasingly important.

Bynot staying active in the workforce or continuing education for thepast 14 years, the following is an example of information I learned thisweek and the non-accountant may not have knowledge of either:“Recently, IFRS has increasingly called for use of fair valuemeasurements in the financial statements….Fair value information may bemore useful than historical cost for certain types of assets andliabilities and in certain industries.”² Many of the IFRSprinciples are opinion based and that leaves a lot of room forinterpretation. As accountants, I believe one of the challenges we faceis that we need to be careful to interpret the information with factsand not our opinions of the interpretations the company followed.

Forme personally, I feel that the ever-changing differences in IFRS andGAAP will encourage me to continually enroll in online courses andconferences to stay current and knowledgeable.

¹ International Investing. (2016, December 07). Retrieved July 31, 2020, from https://www.sec.gov/reportspubs/investor-publications/investorpubsininvesthtm.html

² Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2018). Chapter 2: Basic Principles in Accounting. In Intermediate accounting IFRS edition (pp. 2-16). Hoboken, NJ: Wiley.