Convert to IFRS or Stick with U.S. GAAP? How About Neither? | AccountingWEB

Convert to IFRS or Stick with U.S. GAAP? How About Neither?

As I noted in my last post, it's difficult to argue that there should be any material differences in the portrayal of the same economic situation among reporting entities in different countries. Consequently, for general-purpose financial reporting, it makes sense for similar reporting entities throughout the world to use the same set of high-quality standards. But having researched this situation for years, one thing is clear to me: neither U.S. GAAP nor International Financial Reporting Standards (IFRS) are feasible candidates for the single, global set of standards that would most benefit individuals, companies, and countries.

In particular, it’s very clear that U.S. standard-setters, regulators, and other participants in the financial reporting supply chain don’t consider the specific standards that comprise IFRS to be superior to the standards that comprise U.S. GAAP. If we thought the standards in IFRS were better, we’d have incorporated them into U.S. GAAP by now, because there’s been nothing to stop us from doing so and we’ve had decades to make it happen. The overt lack of support of the world’s largest national economy for the specific standards that comprise IFRS means those standards have no realistic chance of being globally accepted.

It’s equally clear that the rest of the world doesn’t want to use the standards that comprise U.S. GAAP. If other countries thought the standards in U.S. GAAP were better than those in IFRS, they’d have adopted U.S. GAAP instead of IFRS or at least would have seen that IFRS incorporated individual standards from U.S. GAAP by now. The fact that countries whose economies collectively dwarf the U.S. economy have rejected U.S. standards with near unanimity means U.S. GAAP has no realistic chance of global acceptance.

Given this situation, it is inconceivable to me that users of either U.S. GAAP or IFRS will somehow become convinced that they should adopt the other set of standards. Consequently, I see our only hope for the global acceptance of one set of standards to lie in standards that are better than both current U.S. GAAP and current IFRS—that is, standards that do not exist today.

Tying back to my previous blog posts, this indicates that neither a conversion to current IFRS nor the continued use of current U.S. GAAP is an appropriate public-policy goal for the United States. Instead, we should be aiming to develop a set of standards that’s better than either. And whether you think that’s what we should be doing or not, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have in fact been doing it and continue to do it.

Please don’t presume that the resulting set of standards will be called IFRS, otherwise, you’ll continue to propagate confusion that is already plentiful. I always discourage folks from referring to any future converged set of standards as IFRS because that confuses it with today’s IFRS, which isn’t the same thing at all. It’s like using the name “apple” to refer to both apples and oranges. (see Rick Telberg’s YouTube video of me talking about this at the 2009 NASBA National CPE Expo).

Realistically, though, if the countries of the world haven’t agreed on what’s “good enough” by now, what are the chances that we’ll soon agree on what’s “better”? Especially when “better” is in the eye of the beholder? In my opinion, the likelihood of future agreement on “better” standards is high, but not certain. At best it will take many years—I think 10 years is much more realistic than, say, 3 years. And I acknowledge the possibility that complete convergence on a single set of standards might never happen (or might not persist once attained).

The biggest problem with the current approach to standard-level convergence is that it will deliver few benefits before it’s complete (or nearly complete), which is likely to be a long time coming and might never actually happen. So what we need is an approach that enables us to capture more benefits sooner and without being predicated on the eventual attainment of total convergence. Ideally, such an accelerated approach would also respect the sovereignty of individual countries and jurisdictions so that we don’t get hung up in the “who” issue of standard-setting (see my previous post).

Fortunately, there is such an accelerated approach, and I’ll share it with you in my next post.

This blog

Bruce Pounder, MBA, CMA, CFM, DipIFR (ACCA) is an internationally recognized expert on corporate financial reporting and the global convergence of financial reporting standards. He has two decades of firsthand financial reporting experience as the CFO of a privately held corporation and has served as a financial reporting consultant to many public corporations. Currently Bruce is President of Leveraged Logic, a leading provider of educational products and services to accounting professionals. He is the author of the 2010 U.S. Master GAAP Guide (CCH), the Convergence Guidebook for Corporate Financial Reporting (Wiley), and the monthly "Financial Reporting" column of Strategic Finance magazine. Bruce also presents the live webcast series "This Week in Accounting."

More from this blog

Bloggers crew

Steve Knowles has spent 25 years in business and practice in the UK, but he also worked in the states and the years haven't dulled his way of seeing an alternative view to everyone else, and every day is a new adventure.


Joel M. Ungar, CPA is a lifelong resident of the Detroit area and a graduate of The University of Michigan. He is a principal with Silberstein Ungar, PLLC, a Top 15 auditor of SEC public reporting companies.


Allan Boress, CPA, with over 25 years as a practitioner and consultant to the accounting profession. Mr. Boress is the author of 12 published books in 6 different languages, including a best-seller, The "I-Hate-Selling" Book.


Larry Perry, CPA, CPA Firm Support Services, LLC, is the author of accounting and auditing manuals, author and presenter of live staff training seminars, and author of webcast and self-study CPE programs. He blogs about small audits, reviews, and compilations.

Sandra Wiley, COO and Shareholder, is ranked by Accounting Today as one of the 100 Most Influential People in Accounting as a result of her prominent role as an industry expert on HR and training as well as influence as a management and planning consultant. She is also a founding member of The CPA Consultant's Alliance. Sandra is a certified Kolbe™ trainer who advises firms on building balanced teams, managing employee conflict and hiring staff.

Maria Calabrese, CIR, Human Resources manager for Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC in Cranford, New Jersey, Maria's topics revolve around the world of: Mentoring, Performance management, and The "Y Generation," a.k.a. "The whY generation".


William Brighenti is a CPA, Certified QuickBooks ProAdvisor, and Certified [Business] Valuation Analyst, operating an accounting, tax, and QuickBooks consulting firm in Hartford, Connecticut, Accountants CPA Hartford.


Ken Garen, CPA, is the co-founder and President of Universal Business Computing Company (, a software development firm of high-volume, high-productivity accounting and payroll technology.


Eva Rosenberg, MBA, EA, is the publisher of, and author of the weekly syndicated Ask TaxMama column. She provides answers to tax questions from taxpayers and tax professionals worldwide.


Amy Vetter, CPA, CITP is the CPA Programs Leader for Intacct Corporation responsible for leading the CPA/BPO Partners nationally.

Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State tax Notes entitled, "The SALT Effect." For more info, visit his website:
Scott H. Cytron, ABC, is president of Cytron and Company, known for helping companies and organizations improve their bottom line through a hybrid of strategic public relations, communications, marketing programs and top-notch client service. An accredited consultant, Scott works with companies, organizations and individuals in professional services (accounting, finance, medical, legal, engineering), high-tech and B2B/B2C product/service sales.

Rita Keller is a nationally known CPA firm management consultant, speaker, author, mentor and blogger. She has over 30 years hands-on experience in CPA firm management, marketing, technology and administrative operations.

Stacy Kildal is the mom of two fantastic kids, an Advanced Certified QuickBooks ProAdvisor, Certified Enterprise Solutions ProAdvisor, Sleeter Group Certified Consultant, a nationally recognized member of the Intuit Trainer and Writer Network, and co-host of RadioFree QuickBooks.
Michael Alter's blog specializes in providing practical advice to those who seek greater profitability and practice management tactics that enhance deeper client relationships.

Sally Glick, CMO, Principal, Marketer of the Year in 2003 and AAM Hall of Famer in 2007, leads a lively discussion of the constantly expanding roles of marketing and the professional marketers that drive this initiative in accounting firms of all sizes.


The IMA Young Professionals Blog features the insights of IMA’s Young Professionals Committee. Committee members share advice and experiences on careers, continuing education, work/life balance, and other issues affecting young accounting and finance professionals.


FEI Financial Reporting Blog provides highlights from SEC, PCAOB, FASB, IASB, and other regulatory news, including reporting under Sarbanes-Oxley Sect 404. It is written by Edith Orenstein, Director of Technical Policy Analysis at FEI.


Sue Anderson has 30 years of experience in continuing education for accountants. Currently she is the program director for online CPE provider CPE Link.


Jim Fahey is COO of Apple Growth Partners, a regional CPA firm in Ohio. His focus is on the effective and efficient use of technology within the firm by all team members.

Caleb Newquist is the Editor-in-Chief of Sift Media US, overseeing content for both AccountingWEB and Going Concern.

Leita Hart-Fanta, CPA, CGFM, and CGAP is the author of "The Yellow Book Interpreted" and owner of a website devoted to training for governmental auditors.


AccountingWEB is more than just a U.S. team of journalists and financial and technology experts - we have an international side, too! Members of our British team who publish share their ideas, insights, and perspectives from across the pond.