S.E.C. Wary on Global Accounting Standard Essay

Submitted By pawman1
Words: 460
Pages: 2

In the article, the US Securities and Exchange Commission (S.E.C.) is growing more concerned about international countries and their financial reporting standards. As the S.E.C. has been looking into this conflict, James Kroeker (Chief Accountant of the Commission), has been reviewing and finally wrote about the conflict. Over the course of two years, he found out that if the US were to transition over to International Standards or IFRS, the transition "was not supported by the vast majority of participants in the US capital Markets." However, the current objective of the IFRS results in, Current Cost Accounting, Financial capital maintenance in nominal monetary units, and Financial capital maintenance in units of constant purchasing power. Some of the US capital Markets must have a different strategy of calculating or using Financial guidelines. Therefore, they do not want to change over to the IFRS because of the amount of reformation and losses (cost) that would happen in their business.

Current Cost Accounting "takes the consideration of one(s) Company's assets at the present replacement cost, instead of the price paid originally. Current costs accounts are drawn up by adjusting the historical value for inflation and the main adjustments such as depreciation." For example; if one were to buy a 'product' under the circumstances of the IFRS, the accountant would record the modern time renewal cost instead of the initial price.
"The difference between financial capital maintenance in nominal monetary units (traditional Historical Cost Accounting) and financial capital maintenance in unit of constant purchasing power, i.e. Constant Item Purchasing Power Accounting (CIPPA), is that the stable measuring units assumption is always implemented under HCA but [has never put into action] under CIPPA." For financial capital maintenance the capital is shown in the terms of nominal fiscal units, the profit represents the increase in capital over a certain…