Accounting & Auditing | Legislative / Regulatory | Training & CPE

IFRS is coming; last day for GAAP is 2010

Ifrs_book Tim Reason of CFO magazine recently reported that President-elect Obama has appointed Paul Volcker to head up his special Economic Recovery Advisory Board. It seems former Treasury Secretary and Federal Reserve Chairman Volcker has some heavy accounting experience and a strong tendency toward international financial reporting standards.

Then there is the prediction of Professor David Albrecht that "the last year GAAP may be used in the U.S. by SEC reporting companies is for fiscal years ending December 31, 2010. The Obama administration will rework the proposed roadmap." See his post, Accounting Education Under IFRS -- although I do not agree with his concept that IFRS equals income smoothing.

So what does this mean for accounting education?

Actually, a discussion via his blog post titled What I Meant in Accounting Education under IFRS covers some very good ideas about what changes need to happen when we begin teaching IFRS in schools (and, I believe, in CPE / professional development as well). The discussion comes from a visit by SEC Deputy Chief Accountant Julie Erhardt to a graduate class of Professor Dennis Beresford (former chairman of the FASB).

Julie recommends that the approach to financial accounting needs to change to a focus on the business issues first. She goes on to say, "Only after the economic issues and the basic principles are covered would some of the details (e.g., what to do with contingent rentals) that distinguish IFRS from GAAP be mentioned. In this approach, about 50 percent of the effort would be on the economics, 25 percent would be on the principles (that ought be to pretty similar), and 25 percent on the rules (that could be different)."

There are several more posts from Professor David Albrecht over at his blog, The Summa, which are worth looking at if you are trying to comprehend what the change to IFRS will mean (including some comprehensive opposing perspectives).

What do you think: To IFRS or not? What year do you predict?