Why Not Just Adopt IFRS for US Company Financials

Given the sturm und drang over the convergence of US GAAP with international financial reporting standards (IFRS), would it not be easier to just adopt IFRS for the financial statements of US public companies and move on. After all, about 100 countries around the world have adopted IFRS and only one country uses US GAAP. This solution would short circuit years of looming debate over how to converge IFRS and US GAAP and allow for the use of a single set of accounting standards for all financial statements in the US and European Union. And, fear not, IFRS has a very competent standard-setter in the International Accounting Standards Board (IASB). But therein also lies the problem.

At a recent SEC Institute seminar, Herschel Mann, KPMG Professor of Accounting at Texas Tech University posed the question and then answered it. Short answer: it ain’t gonna happen. One reason given by Professor Mann is partly political, in that it would not be politic to have the accounting standard-setter for US companies be the London-based IASB instead of a certain standard-setter located in Norwalk Conn. I completely agree with his position. I firmly believe that we are embarked on a road to the convergence of IFRS and US GAAP and, while the road may get rough at times, there will be no shortcuts to the destination.