I am finding the IFRS v. GAAP thing to be absolutely fascinating.
After a lot of study, I have come to think of it as four separate topics.
(1) There are substantial advantages to the world if IFRS becomes the lingua franca of financial statements. Despite David Tweedie’s attempts to hawk IFRS to the world, this is the aspect of IFRS that I never see any really good articles on. Do they exist? This is not the same as are there any substantial advantages to the U.S. if it swtiches to GAAP. This is treated under topic two.
(2) There are some substantial disadvantages to the U.S. if IFRS become the new GAAP for SEC reporting purposes. These receive most of the ink. The principals here are Jensen, Selling, Niemeier, Ball and Sunder. To be honest, the arguments are compelling and their substance has never been addressed by IFRS defenders.
(3) The national politics of this is absolutely fascinating, sort of like a bad horror film. Jensen has done the most here, saying that the political motivation for Cox simply does not pass the smell test.
(4) There are many twists and turns of interest to academics who study the process of standard setting, either from a political science perspective or an historical perspective.
I think that any of these represent serious issues for academic study.
For my part, I’ve been blogging. It is difficult becaue there are four somewhat distinct areas with considerable overlap an with real-time events occurring in untidy sequence. Moreover, I like blogging about these issues because, as an academic, one aspect of the job description is to reflect on what is happening in my neck of the woods. One of the true key advantages of blogging is that it benefits the writer to organize and develop his/her thoughts on a topic.
Over the past few months, there have anti-IFRS arguments: Bob Jensen, Tom Selling, Charles Niemeier (PCAOB member) (my take on the politics behind his revelations remains my most popular blog piece), Shyam Sunder, Ray Ball.
I’ve had a lot to say about IFRS, but it has largely just been talk. Each of the above 5 has something unique and special to say about why IFRS is not a good idea for the U.S.
A few months ago on AECM, I suggested that for IFRS to realize its dreams of leading the way to an international financial system, it needed an International infrastucure. On Friday, I applied this to the anti-IFRS in the U.S. thread. My argument is at: Why IFRS Won’t Work in the United States.
Now, I wonder if irony is the correct term to apply to apparently irreconcilable notions: (1) the world will benefit if IFRS is adopted by everyone in the world, and (2) the U.S. will incur significant costs if it adopts IFRS.
Today, I’ll add my second original piece to the anti-IFRS argument with an analysis of the incremental benefits and incremental costs to the U.S. if IFRS is to be adopted. This second essay is titled: Benefits and Costs to U.S. Adoption of IFRS.