10Minutes on the emerging influence of IFRS

Download 10Minutes on the emerging influence of IFRS

International Financial Reporting Standards have begun to affect US companies, independent of moves to eventually adopt IFRS in the United States. The impact will broaden considerably over the next few years as ongoing convergence of US GAAP and IFRS brings key changes to US financial reporting. Those changes will have numerous implications for US businesses. Revenue recognition, leases, consolidations, and pensions are among the areas where companies may need to rethink certain business operations, strategies, and agreements as a result of convergence (ranging from sales staff compensation to compliance with certain debt covenant agreements). Meanwhile, companies are already feeling the indirect effect of IFRS adoption by their foreign subsidiaries and counterparties, particularly in customer and vendor transactions. These two simultaneous movements—ongoing IFRS adoption around the globe and convergence in the United States—will bring near-constant change to US financial reporting between now and 2012. Companies best poised to adapt to the impending changes have already begun incorporating IFRS-awareness into their business thinking. They're not only staying apprised of how IFRS influences them via their foreign counterparties and subsidiaries, but also taking into consideration how newly converged standards may affect long-term contractual commitments initiated today.

Highlights

• Financial reporting in the United States is being influenced by IFRS in significant ways as the FASB and IASB converge their accounting guidance over the next few years.
• Convergence will accelerate the effects of IFRS, regardless of how the SEC proceeds.
• IFRS impacts US business dealings—for multinationals and domestic companies—independent of convergence.
• Understanding the business implications of IFRS is a competitive imperative for US companies.

Related thought leadership

• Visit the US IFRS publications page.