IFRS and US GAAP: similarities and differences - 2013 edition

  • Print-friendly version
10/22/2013 by US GAAP & IFRS Convergence
IFRS and US GAAP: similarities and differences - 2013 edition

At a glance

PwC's publication will help you develop a broad understanding of the major differences between IFRS and US GAAP. It also contains insight on recent and proposed guidance, including developments pertaining to the overall convergence agenda.

We are pleased to share the 2013 edition of PwC’s IFRS and US GAAP: similarities and differences publication which is designed to assist investors and preparers in becoming financially bilingual – fluent in both IFRS and US GAAP accounting standards. It provides a broad understanding of the major differences between IFRS and US GAAP as they exist today, as well as an appreciation for the level of change on the horizon.

For US preparers, public or private, big or small, knowledge of IFRS is important. Although a potential change to IFRS for US public companies is a longer-term vision, IFRS is increasingly relevant now to many US businesses as they engage in cross-border M&A, report to their non-US stakeholders, and manage their overseas operations.

Preparers are affected by IFRS in multiple ways:

  • Cross border, M&A and capital-raising activity frequently require the use of IFRS;
  • Non-US stakeholders in US companies demand the use of IFRS;
  • Many non-US subsidiaries of US multinationals must comply with IFRS reporting requirements; and
  • US GAAP change continues to be influenced by IFRS.

From an investor perspective, the need to understand IFRS is arguably even greater. US investors keep looking overseas for investment opportunities. Recent estimates suggest that over $6 trillion of US capital is invested in foreign securities. The US markets also remain open to non-US companies that prepare their financial statements using IFRS. There are currently over 450 non-US filers with market capitalization in the multiple of trillions of US dollars who use IFRS without reconciliation to US GAAP.

What companies should do now relative to IFRS?

Although there is much uncertainly around the eventual use of IFRS in the US for public companies, there are certain measured actions companies should consider doing now:

  • Stay engaged in the standard-setting process by participating in FASB and IASB roundtables and comment-letter processes;
  • Develop an understanding of the potential impact of foreseeable US GAAP changes, and identify what can be done now;
  • Maintain some degree of corporate oversight of non-US subsidiaries' IFRS accounting, as complex transactions arise, policies require changing, and new IFRS standards are adopted; and
  • Develop or obtain detailed IFRS skills, depending on the level of M&A activity, global tax strategies, or the reporting needs of non-US stakeholders.