What countries use gaap
IFRS and GAAP International Accountant, Author, Expert
Dr. Barry Jay Epstein, CPA, CFF
The move from U.S. GAAP to International Financial Reporting Standards (IFRS) is accelerating.
Today about 120 nations have prescribed IFRS for publicly-held and, to a lesser degree, private entity reporting. The U.S. FASB has committed to converge U.S. GAAP with IFRS. The U.S. SEC in 2007 eliminated the requirement for foreign private issuers to reconcile to U.S. GAAP if they report under IFRS, and a move is afoot to simply replace U.S. GAAP with IFRS. A decision is due within the next two years: if in the affirmative, all U.S. public companies could convert to IFRS beginning in 2015.
In mid-2009 IASB issued an all-inclusive, simplified standard for optional use by many privately-held entities. This will appeal to preparers, auditors and users who have objected to the ever-increasing complexity of accounting standards, and may provide the impetus for the wider acceptance of IFRS. U.S. accountants may now opine on financial statements prepared in conformity with U.S. GAAP or under IFRS (including IFRS for SMEs ).
International accountant Dr. Barry Jay Epstein, CPA, CFF, foresaw this trend towards one set of global accounting standards more than ten years ago, when he authored the first annual edition of Wiley IFRS. Over the last few years, Dr. Epstein has seen the international accounting standard-setting process claim a number of successes in achieving
greater recognition for, and use of, IFRS.
In Europe, a major breakthrough came in 2002 when the European Union (EU) adopted legislation that requires listed companies in Europe to apply IFRS in their consolidated financial statements. The adoption of IFRS in Europe means that international financial reporting standards replace national accounting standards and requirements as the basis for preparing and presenting group financial statements for listed companies. Outside Europe, many other countries are also moving to IFRS, with international financial reporting standards becoming mandatory in many countries in Asia, Latin America, Southern Africa, the Middle East, and the Caribbean.
Given what has unfolded to date, and what seems likely to follow, the implications of IFRS on accounting, finance and legal professionals, as well as chief financial officers, corporate directors and multinational corporations, are significant and material, including:
- Training on the differences between IFRS and GAAP is imperative
- Financial scrutiny of international joint ventures and other arrangements among parties from different accounting traditions
- Impact on loan covenants as it relates to cross border financing agreements
- Analysis of international credit policies for multinationals
- Sarbanes-Oxley compliance on corporate governance matters
- Rise in securities offerings by foreign registrants and merger & acquisition (M&A) activities
- Litigation risk due to inappropriate use of IFRS
See IFRS and GAAP comparisons and differences at our IFRS versus GAAP Resource Center.Source: ifrsaccountant.com