Comment on IFRS

What's So Global about IFRS?

(CFO Magazine) As global accounting regulators aim to move to a single set of principles-based standards, international financial reporting standards, a set of rules crafted by the International Accounting Standards Board (IASB), have been frequently cited as a possible model. But allowing companies to file under IFRS poses some problems.

"One of the things that will be a challenge is that there have been modifications made as those standards have been implemented locally," says John Archambault, managing partner of professional standards at Grant Thornton. Instead of a single set of international standards, there are now several variations of the rules the IASB initially drafted. Most modifications are minor thus far, says Ray Beier, head of strategic policy and analysis at PricewaterhouseCoopers, but some countries could refuse to adopt significant new standards in the future.

There are also concerns about the quality of audits conducted under IFRS. "Accountants all over the world are applying IFRS. Do we really know how well they're applying it and what their audit standards are?" asks David Sherman, an accounting professor at Northeastern University. As the Securities and Exchange Commission moves to allow foreign issuers to file in the United States under IFRS, "that is going to ignore the potential audit issues, which could blow up," says Sherman. "U.S. GAAP may be rule-based, but it's also extremely well scrutinized and tested. You know what you're getting." — Kate O'Sullivan