Article Critique Essay - Part 4

Article Critique

            The structure of the International Financial Reporting Standards or IFRS and whether it should be set as a standard in formulating financial statements by investors in and to the United States are primary to the article written by David Albrecht in 2008 - Article Critique Essay introduction. With a comprehensive background on accounting and management, Albrecht was able to provide a summary of the significant points to consider for investors in deciding whether to adapt the IFRS or not. Therefore, Albrecht has intended for his critical analysis of the framework of the IFRS to become a guideline for U.S. investors. Because of Albrecht’s technical and comprehensive knowledge on Incremental Analysis and how it was to be applied in assessing the value of IFRS to investors, he was able to seemingly valuable information that is critical to the industry of investors in and to the U.S., but with the need to include information about how the IFRS and GAAP compare, the analysis requires extended analysis to obtain more information on the issue.

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            As aforementioned, Albrecht implemented incremental analysis, an evaluative instrument that measures the benefits and costs of strategies that individuals or institutions are planning to implement. In this case, the incremental analysis was utilized for the purpose of evaluating the benefits and costs of putting IFRS into action. In general, the favorability o the IFRS shall be proven by the results of the incremental analysis. In order for the IFRS to become worthy of replacing the Generally Accepted Accounting Principles or GAAP which is the current system being implemented by financial markets in the country, its calculated benefits should outweigh or exceed the total cost. (Albrecht, 2008)

            The results of the incremental analysis was revealed two-fold, initially focusing on the cost of implementing the IFRS, followed by Albrecht’s discussion on the benefits of the IFRS and which groups of people are benefited in the process. According to Albrecht, is U.S. investors decide to implement the IFRS and abolish the current system GAAP, the industry will suffer. This is because the industry will experience a decline in the rate of values attributed to stocks and bonds. Consequently, addressing this particular situation will necessitate spending, which Albrecht estimated to amount to three trillion U.S. dollars. Added to the need to prevent the devaluation of stocks and bonds are costs constituting the gaps between the conversion rates of currencies which limits the amount of money transferred, the learning processes or activities that will help investors learn the ins and outs of the IFRS, etc. On the other hand, the single benefit that may be obtained from implementing the IFRS is the decline of rates for audit fees. From the incremental analysis chart, U.S. investors will save 0.1 trillion in cost savings from the reduced amount taken due to audit fees. (Albrecht, 2008)

            Based on the objective of the author to present an informative text which sought to advise U.S. investors in the decision-making process of whether to adapt the IFRS or not and discontinue the application of the GAAP, Albrecht was able to successfully argue why he disregards the IFRS promoting the maintenance of the GAAP. Moreover, Albrecht was able to rationalize his arguments by utilizing his technical knowledge of the incremental analysis in presenting measurable quantitative data from which decisions should be based on.

            By and large, I do believe that the comparison between the GAAP and IFRS is necessary in driving his point to a close. It is not enough to present a clear thesis on why IFRS is not a suitable strategy because this particular argument also needs to be supported by information explicating why GAAP is better than IFRS or otherwise. This type of information will fully allow U.S. investors to make well-informed decisions. Therefore, although Albrecht was able to explore the specific aspects of the IFRS by going over an incremental analysis of the benefits and costs of the this accounting framework, there needs to be added information pertaining to the comparative relationship between IFRS and GAAP in order to strengthen the argument on why U.S. investors should choose to sustain the GAAP and diminish considerations regarding the IFRS.


Albrecht, D. (2008). Benefits and Costs to U.S. Adoption of IFRS. Retrieved March 9, 2009,

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