Are You Bilingual?

Many have expressed support for a move to one set of high-quality global accounting standards.  Leaders of the Group of 20 nations have called for significant progress towards this goal.  President Obama in recently released plans for regulatory reforms called for substantial progress to be made in 2009.  A large number of public comment letters to the SEC regarding its IFRS roadmap expressed support for global standards.

While many support the goal, there is disagreement on how to get there.  Some believe the Financial Accounting Standards Board should focus on convergence with International Financial Reporting Standards.  Others believe that adoption of IFRS is the best solution.  Recently, the Federation of European Accountants (FEE) introduced a new wrinkle to the debate.  The organization issued a policy statement recommending that the International Accounting Standards Board drop its convergence program with the U.S., and focus on issues that are more urgent.

Although IFRS adoption in the U.S. is in a holding pattern, IFRS adoption in other countries marches on.  In the end, we face two likely scenarios.  Either the U.S. ultimately adopts IFRS or both IFRS and U.S. GAAP coexist (converged or not).  Under both scenarios, it will be important for U.S. CPAs to build foundational knowledge of IFRS.

Recognizing this need, IFRS questions will be incorporated into the CPA exam no later than 2012.  Colleges are incorporating IFRS into their accounting curricula and accounting textbooks with IFRS content are expected in the reasonably near future.

If college and the exam are in the rearview mirror, the need to be bilingual in both U.S. GAAP and IFRS will be important for many financial professionals in the future.  While a CPA today may work exclusively in US GAAP, their next opportunity may be with a company or client that uses IFRS.  For those that work for foreign owned companies, chances are they are proficient today.  For those that work with U.S. multinationals, developing IFRS proficiency may be an important career-expanding decision.

How important do you believe being bilingual in U.S. GAAP and IFRS will be in the future?

- Paul Parks|www.IFRS.com

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[Randall]

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[Kerry]

I am a US CPA seconded in Asia and about half of my client were on IFRS or have done an implementation this year. I had no previous exposure to IFRS previously, only USGAAP. I was pleasantly surprised that IFRS and US GAAP are more similar than they are different, and the IFRS guidance is much easier to navigate and understand. Looking forward to convergence between the two and becoming more of an expert that can help me leverage my skill set when I return to the states.
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The hockey stick chart party is over and it is time to get back to the basics; GAAP and appropriate independent roles of financial responsibility. Please help by learning to speak a second language and reaching out to make the world a safer place for Capitalism and GAAP.

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There is no doubt that GAAP faithful are out numbered in a count physical bodies. In order to converge in a meaningful way, the Glass-Steagall segregation of duties must be restored in America's financial regulatory realm. If we do not restore the separation of the insurance, banking, brokering, and investment banking roles, we are destined to perpetuate chaos, fraud, corruption, ponzi schemes, pay-to-play, and other non-value added economic relationships.
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Do some searches on IFRS.com and on the internet, you will find a number of them. As the move to IFRS gains momentum, more IFRS training specifically developed for tax professionals will likely be developed.

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"While many support the goal, there is disagreement on how to get there. Some believe the Financial Accounting Standards Board should focus on convergence with International Financial Reporting Standards. Others believe that adoption of IFRS is the best solution. "

But for me I would say that having convergence with International Financial Reporting Standards is the best solution.

[gm]

Since I'm a CPA that has an experience with IFRS and technology, and this topic seems to call for multilingual approach, I would like to sensitize my accounting brethren to XBRL (and UTF-8 and Unicode by extension). You may start seeing those as drivers from the technology point of view. So, IFRS may mean nothing to a programmer, but Unicode certainly means a lot or just may be another side of the same coin.

[J Johnson]

I am a US CPA seconded in Asia and about half of my client were on IFRS or have done an implementation this year. I had no previous exposure to IFRS previously, only USGAAP. I was pleasantly surprised that IFRS and US GAAP are more similar than they are different, and the IFRS guidance is much easier to navigate and understand. Looking forward to convergence between the two and becoming more of an expert that can help me leverage my skill set when I return to the states.

[Paul Parks]

In response to Marc’s question regarding training for tax professionals…..U.S. tax accountants are trained with a foundation of knowledge in US GAAP. A move to IFRS will require a broad understanding of the new set of standards. With this understanding, tax professionals will better understand pre-tax differences between IFRS and GAAP and can assess how the move will affect their clients and companies. It will be important for tax practitioners to develop that foundation of IFRS knowledge, so many existing IFRS courses focused accounting and financial reporting are just as important for tax practitioners.

A number of whitepapers and articles have been written about how IFRS will affect tax planning and compliance. Do some searches on IFRS.com and on the internet, you will find a number of them. As the move to IFRS gains momentum, more IFRS training specifically developed for tax professionals will likely be developed.

[anne-marie johnson]

Learning a new language is hard. Common, and disappointing, themes emerged from the SEC roadmap comment letters. To paraphrase -
“We think that a global set of accounting standards is a great idea, but why can’t they use ours?”
“US GAAP is more mature than IFRS and that’s why it is more complex – IFRS will surely develop more rules as it matures and we’ll be back where we started”

These themes ignore reality. With China moving to IFRS (and all of Europe there already ) the debate about whose standards are ‘best’ is over.

To assume IFRS will develop along the lines of US GAAP shows how little understanding there is currently of a principles based system. The IASB board members, in their webcast meetings, are rigorous about distinguishing between principles and rules and a great deal of effort goes into distilling standards down to their essential principles. Application of those principles requires rigorous analysis of transactions, and flexible thinking, but ultimately a principles system is more robust than a rules based one, which forever plays catch-up.

US accountants are used to learning and applying rules. IFRS requires different skills. A first step is learning the IFRS standards, but those accountants who develop the ability to think flexibly, argue by analogy, and determine underlying economic substance will have a competitive advantage going forward.