Going Global Essay

Submitted By blondishmonster
Words: 2080
Pages: 9

Going Global: Implementing IAS/IFRS
Biana Moloksher
Western Governor’s University

Table of Contents

Cover Page………………………………………………………………………………Page 1

Table of Contents………………………………………………………………………..Page 2

Executive Summary……………………………………………………………………..Page 3

Shifting Toward IAS…..………………………………………………………………..Page 3

Research Findings………………………………………………………………………Page 4

Inventory Costing…………………………………………………………………..Page 4

Recovering Value………....………………………………………………………..Page 5

Squaring Off Revenue Recognition…………….…………………………….…….Page 6

Recommendations……………………………………………………………………....Page 7

Conclusion……………………………………………………………………………...Page 7 References………………………………………………………………………….Page 9

Executive Summary
Publicly traded corporations entering the global market are gearing toward the convergence of financial reporting methods. The anticipated shift toward international accounting standards is targeted to assimilate all financial reporting into one standard rather than the many that are imposed across countries. The majority of publicly traded companies within the United States use GAAP; created by the Financial Accounting Standards Board and imposed by the Securities and Exchange Commission. The anticipated movement from GAAP to IFRS will mean major changes for corporations willing to undertake the task. Switching to IFRS will allow foreign investors better understand the financial standing of the corporations they choose to invest in. The benefits of having one global system outweigh the temporary grievances during assimilation.
Shifting Toward International Accounting Standards (IAS) In the United States the Generally Accepted Accounting Principles have been the primary source of reporting for publicly traded companies. However, globalization of trade has spurred a movement for the adoption of the International Financial Reporting Standards (IFRS) which are already used by corporations in the European Union and many others abroad (Gannon & Ashwal, 2004). In 2001, 15 members from 9 different countries comprised the International Accounting Standards Board (IASB) and set the IFRS into motion (AICPA, n.d.). In 2008 approximately 90 countries had already fully conformed with the IFRS with approximately 30 additional countries setting up to conform to these standards (AICPA, n.d.). The Securities and Exchange Commission (SEC), which is responsible for implementing the GAAP in the United States had begun to push for the adoption of IFRS in the United States by issuing a statement in support of convergence of global financial reporting standards. Within the United States, many publicly traded corporations with public trade obligations have already adopted IFRS or begun the process of convergence in order to comply with global trading expectations. Those companies who are preparing for a change in their financial reporting methods must make adjustments to allow for the differences between GAAP and IFRS.
While both systems use a double-entry system that tracks assets and liabilities the differences are substantial enough to require new IT systems, IFRS knowledgeable CPA’s and other costly expenditures. The major divergences would include differences in inventory costing methods, impairment write-downs and revenue recognition.
Inventory Costing Implementation of International Financial Reporting Standards (IFRS) will affect the way inventory costing is conducted and alter the current methods under the Generally Accepted Accounting Principles (GAAP). Publicly traded corporations with inventory stock poised for international trade are bound to make changes in order to meet with new global regulations. Inventories that fall under these considerations are identical for GAAP and IFRS. Under both methods, inventories are classified as assets meant to be sold, items used in the development process when creating items for sale, or fall under the category of…