Most of the world’s capital markets now require IFRS for the financial statements of publicly traded companies. The remaining major capital markets without an IFRS mandate are:
· The United States, which has no plans to change
· Japan, where voluntary adoption is permitted but not required
· China, which intends to fully converge at some undefined date
The SEC issued a report on the implications of incorporating IFRS into the US system for financial reporting in 2012 and found little support for the adoption of IFRS as authoritative guidance in the US. Although mandatory use of IFRS for US companies is not required, the SEC representatives suggested FASB and IASB should work together to eliminate differences when in the best interest of capital markets in 2016. In 2017, the SEC Chair pointed out the SEC should support efforts by FASB and IASB to converge the accounting standards to enhance the quality and comparability of financial reporting. The SEC is also discussing the possibility of allowing domestic companies to voluntarily submit IFRS financial information (without reconciliation) in addition to their US GAAP financial statements.
· For this Week’s Discussion, please explain whether or not you think that US companies need to understand IFRS. Since it is not required here, is it even relevant to US companies? If you were a large investor based in the US, does IFRS matter to you? Why or why not?