Goodbye GAAP, Hello IFRS

I wrote in April on More Partner Income about a CFO magazine article about the impending replacement of the Generally Accepted Accounting Principles (GAAP) standard for public accounting to the International Financial Reporting Standards (IFRS).

It appears the time has come.  According to a August 27th article in the Financial Times, “US companies are set to switch to international accounting rules in a move that will, for the first time, see all the world’s most important listed groups reporting according to the same set of standards.”

A “roadmap” has been proposed by the SEC to have US companies conform to the standard by 2014.

Christopher Cox, SEC chairman, said more groups were reporting under IFRS than US GAAP and the number would rise as other large economies made the switch. He said US GAAP would be marginalised if the US did nothing, making it harder for international investors to consider US companies.

As noted in the April post, this may mean nothing to you, especially if you report only on a cash basis.  However, if your firm is looking to get a true look at your financials, accrual based accounting is needed.  For those who were looking to GAAP, look again.  IFRS looks to be the new standard.

For more information on IFRS, click here to visit a page dedicated to it by Price Waterhouse Coopers.