IFRS GAAP International Accountant, Author, Expert

Dr. Barry J. Epstein, CPA
Russell Novak & Company, LLP

Accounting standards-setting bodies are rapidly moving toward convergence between U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). On August 28, 2008, the U.S. Securities and Exchange Commission proposed the elimination of U.S. GAAP in favor of IFRS for public companies, beginning in 2010.

International accountant Dr. Barry Jay Epstein, CPA, foresaw this trend towards one set of global accounting standards more than ten years ago, when he authored the first annual edition of Wiley IFRS. Over the last few years, Dr. Epstein has seen the international accounting standard-setting process claim a number of successes in achieving greater recognition for, and use of, IFRS.

In Europe, a major breakthrough came in 2002 when the European Union (EU) adopted legislation that requires listed companies in Europe to apply IFRS in their consolidated financial statements. The adoption of IFRS in Europe means that international financial reporting standards replace national accounting standards and requirements as the basis for preparing and presenting group financial statements for listed companies. Outside Europe, many other countries are also moving to IFRS, with international financial reporting standards becoming mandatory in many countries in Asia, Latin America, Southern Africa, the Middle East, and the Caribbean.

In November 2007, after considerable deliberation and public comments, the Securities and Exchange Commission (SEC) voted unanimously to approve rule amendments that will allow foreign private issuers in the U.S. to file financial statements without reconciliation to U.S. GAAP if those financial statements are prepared using IFRS as issued by the International Accounting Standards Board (IASB).

Given what has unfolded to date, and what seems likely to follow, the implications of IFRS on accounting, finance and legal professionals, as well as chief financial officers, corporate directors and multinational corporations, are significant and material, including:

• Training on the differences between IFRS and GAAP is imperative
• Financial scrutiny of international joint ventures and other arrangements among parties from different accounting traditions
• Impact on loan covenants as it relates to cross border financing agreements
• Analysis of international credit policies for multinationals
• Sarbanes-Oxley compliance on corporate governance matters
• Rise in securities offerings by foreign registrants and merger & acquisition (M&A) activities
• Litigation risk due to inappropriate use of IFRS

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