IFRS and US GAAP: similarities and differences

"Frankly, I think many people are starting to get tired of convergence, on both sides of the ocean. The past 10 years shows this is an exceedingly difficult and slow process."

David Schmid, Partner, National Professional Servcies Group, International Accounting Leader

The Debate: IFRS

 
 

"Investors seem reluctant to invest resources in obtaining a better understanding of IFRS until it becomes clear whether and how the US may incorporate IFRS."

Jim Kaiser, US Convergence & IFRS Leader

Perspective:
M&A and IFRS

 
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IFRS and US GAAP: similarities and differences
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In this publication – 2012 update

This publication helps readers get a broad understanding of the major differences between IFRS and US GAAP today — as well as an appreciation for the level of change on the horizon. While not every difference between IFRS and US GAAP is covered here, the differences we generally consider to be the most significant and/or most common are spotlighted.

Changes for our 2012 edition include:

  • A revised introduction reflects the current status, likely next steps, and what companies should be doing now (see page 2);
  • More current analysis of the differences between IFRS and US GAAP — including an assessment of the impact embodied within the differences (starting on page 11); and
  • Details incorporating authoritative standards and interpretive guidance issued through September 1, 2012 (throughout).

To request a hard copy of this publication, please contact your PwC engagement team or contact us.

Background

In July 2012, the Staff of the SEC's Office of the Chief Accountant published its final report on its IFRS Work Plan. The report states that adopting IFRS as authoritative guidance in the United States is not supported by the vast majority of participants in the US capital markets, and would not be consistent with the methods of incorporation followed by other major capital markets (e.g., the endorsement process used for the European Union). On the other hand, the Staff found substantial support for exploring other methods of incorporating IFRS (that demonstrate the US commitment to the objective of a single set of high-quality, globally accepted accounting standards).

Despite the unclear adoption timeline from the SEC, we believe the impact of accounting changes resulting from the FASB's and IASB's efforts will be significant and will have broad based implications. IFRS has already influenced US GAAP and we believe this influence will continue.

Four main challenges that merit companies' attention include:

  • Keeping pace with financial reporting change as the FASB and IASB continue their standard-setting activities;
  • Monitoring subsidiaries' IFRS accounting requirements;
  • Understanding how the structure of deals and transactions with non-US counterparties may be influenced by those counterparties' interest in IFRS accounting outcomes; and
  • Ensuring accurate and complete IFRS reporting to non-US stakeholders.