In the last few years, the global capital markets have experienced remarkable growth, divergence and integration. This has paved the way for the adoption of a single set of comparable and consistent international accounting standards: International Financial Reporting Standards (IFRS).
International Financial Reporting Standards (IFRS) is a single set of high-quality global accounting standards. The IASB (International Accounting Standard Board) works in close cooperation with stakeholders around the world, including investors, national standard-setters, regulators, auditors, academics, and others who have an interest in the development of these high-quality global standards. More than 120 countries currently require or permit the use of International Financial Reporting Standards (IFRS), while the remaining major economies have established timelines for convergence with, or adoption of, IFRS. The Securities and Exchange Commission (SEC) in the United States is set to decide on whether the US will embrace IFRS fully or gradually.
By enforcing IFRS among public companies, governments have been able to provide a greater reassurance to investors, credit rating agencies and lenders. Multinational public companies are able to lower their cost of consolidations and to report their financial statements to regulators in a uniform manner. This also enables lower cost investor analysis by expanding the global capital market and making it more accessible than ever before.
In the United States, IASB and FASB have been working productively to unite US GAAP with IFRS. In 2006, they issued a Memorandum of Understanding, which confirmed their intent to develop common accounting standards. The SEC has been equally supportive in the global convergence process. They are presently in the process of making their decision on the requirements for public companies. Although the decision is still unclear, they recommend companies in the US to embrace IFRS.
Click here to see a comprehensive list of standards and their quick summaries.