C-1
APPENDIX C
INTERNATIONAL FINANCIAL REPORTING STANDARDS
DISCUSSION QUESTIONS
1. In recent years, the removal of trade barriers and the growth in cross-border equity and debt
issuances have led to a dramatic increase in international commerce. As a result, companies are
2. International Financial Reporting Standards (IFRS) are a set of global accounting standards.
IFRS applies to companies that issue publicly traded debt or equity securities, called public
companies, in countries that have adopted IFRS as their accounting standards. Since 2005,
all 28 countries in the European Union (EU) require public companies to prepare financial
statements using IFRS. In addition, more than 100 other countries have adopted IFRS for
public companies.
3. The International Accounting Standards Board (IASB) is the body charged with developing
International Financial Reporting Standards. Like the FASB, the IASB is an independent
4. a. Adoption would entail the U.S. Securities and Exchange Commission formally deciding to
adopt IFRS as the accounting standard framework for U.S. GAAP. Only the SEC has the
authority to adopt IFRS as GAAP for U.S. public companies. Presently, the SEC has not
5. a. U.S. GAAP is considered to be a “rules-based” approach to accounting standard setting.
The accounting standards provide detailed and specific rules on the accounting for
business transactions. There are few exceptions or varying interpretations of the
accounting for a business event.
b. IFRS is a “principles-based” approach that must be broad enough to capture cross-country
legal and cultural differences, while still presenting comparable financial statements. This
approach provides greater opportunity for different interpretations of the accounting
treatment of a business event across different business entities. It also provides more
latitude for professional judgment than typically found in comparable U.S. GAAP.
APPENDIX C International Financial Reporting Standards
6. Under IFRS, a company may select between historical cost or revalued amount (a form of
7. IFRS prohibits the use of LIFO. U.S. GAAP allows the use of LIFO.