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Monetary Units and Economy in the United States

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    U. S. Adopting IFRS The United States is coarsely going through a big dilemma. It is deciding whether to adopt International Financial Reporting Standards (IFRS), or to stay with the current U. S Generally Accepted Accounting Principles (GAAP). Since this is such a serious decision, now would be an opportune time to take a look at what the advantages and disadvantages would be of switching to the new way of financial reporting, and doing so, shows the beliefs of the costs being too high to adopt a new set of reporting standards.

    People who support switching from GAAP to IFRS argue that IFRS will offer a general reporting language and consistent financial reporting for companies with global operations to make financial reporting more meaningful across borders. And. Supporters also believe that one common reporting system will cut costs for companies and make it easier for investors to compare the financial statements of companies from different countries (Diamond and Herrmann, August 2008).

    From the problem that the switch to IFRS would be exceedingly costly, to the fact that IFRS leaves more room for interpretation and lacks bright line rules, I will discuss all the reasons why switching to IFRS soon would not be the right decision for the U. S. Purpose The firmness of purpose for this essay is to look at the pros and cons that can occur if the United States were to change by reversal their business enterprise coverage cubic content unit from U. S Collection to IFRS. My analysis will focus on the dispute between IFRS and U. S GAAP, the cost it would take to go through a new fit of reporting standards, the education and

    training disruption, and the advantages vs. the disfavor of adopting IFRS. Distinguishing between IFRS and U. S. GAAP The Reference of Businesses interprets the main conflict of GAAP and IFRS. Under IFRS, inventory that has been recorded can be reversed in future periods to meet particular criteria. In U. S. GAAP, modifying inventory is prohibited once recorded. Capitalist and other users have also been well served by the system of financial information. ” The primary difference between IFRS and U. S. GAAP is that IFRS be more discretion and that U. S. GAAP is more principles-founded and elaborate.

    IFRS has wider rules and less fact subject matter applications, giving more room to explanation. Thus, IFRS incorporates the value judgment of a controller in its financial report. These judgments can easily be influenced by incentives a company may have, many ways to go through IFRS. As an example, IFRS fit into one book, about two inches thick while the three FASB paperbacks of pronouncements plus the paperback version of the FASB Emerging Issues Task Force consensus measure about nine inches thick, but doesn’t include all the authoritative literature.

    However, there are other significant differences with IFRS that remain which are: (1) IFRS does not authorize Last in First out (LIFO) as an inventory costing playacting. (2) IFRS has another response and pass judgment aimed for contingencies. (3) IFRS does not authorize curing indebtedness covenant law-breaking after year-end. (4) IFRS’s content regarding revenue assignment is less extensive than GAAP and contains relatively little industry-specific teaching. IFRS (Principle-Based) vs. U. S. GAAP (Rules-Based) A reason behind why the U. S. should not switch to IFRS and should keep U.

    S. GAAP practices instead is the fact that IFRS is key-based, while GAAP is rules-based. There is an imperative high status between IFRS and GAAP because it defines that with implementation of IFRS comes more chance for rendition in on fiscal assertion, and this is not something that the U. S. needs. The victims would end up being all of us because the markets will never bid security prices higher in response to more information uncertainty and risk, and instead, capital costs will go way up driving those prices lower (Bahnson and Miller, October 2011). For principles-based accounting

    to act upon, those in charge must have the right principles. Current administration is clearly lacking in that fondness. Instead, they seem to have only one self-interested cognitive content in intellectual, and that is to do whatever it takes to state fiscal statements that people want to see. IFRS has a slim Possibility of Comparability Likeness between business enterprise statements not being achieved is reality for the U. S. to abort switching to IFRS. Although supporters of IFRS espousal in the U. S. converse that it will give a likeness between business enterprise statements worldwide, which is not the case.

    The purpose for the goal of comparability monetary units will not succeed in this. Dissenting the backgrounds of people in many countries applying IFRS means interpretive difference of opinion will arise due to different humanities exercises (Taub, September 2007). SEC Presiding officer Helmsman declared, “Securities control can be converted to a far higher degree than we have already attained. It is unrealistic to think we should take a leak supposable, because of differences in national laws, economic conditions, and goal” (November 2008). Granted Chairman Cox supports the switch from U. S.

    GAAP to IFRS, he blatantly admits that there would still be differences in financial reporting, and financial statements even if IFRS will enforce. Benefactor discourse that one of the goals of switching to IFRS is to give greater comparability, but President Cox’s comments prove this. Challenging greater comparability reached by switching to IFRS is obviously chopped. Additionally, it has been hard enough for the Fiscal Accounting Standards Inhabit (FASB) to run only within the U. S. More likely, it will doubtlessly be more complicated for an International body with many cultures, economies and speech.

    With such contrary, its fate that International standards will be even more effect to decide than U. S. GAAP and this could lead to the phenomenon of declined usefulness and less comparability (Bahnson and Miller, Gregorian calendar month 2008). Converting to IFRS will cost the U. S. The U. S. will have to pay a lot of money in the process of converting to IFRS. Some of these reimbursements include work force training, personnel preparation, and system changes. Training professionals effectively about IFRS in the workforce will lead to a successful changeover.

    Furthermore, colleges and universities will comprehend new accounting information better if trained properly. User training needs enforcement for IFRS aggregation will prosper if conscientiously understood by the investment world organization. IFRS approval would also lead to changes to operational software system and information engineering systems, which could likely be a transition that would take several held (Diamond and Herrman, Aug 2008). Under the Security and Exchange Commission’s (Securities and Exchange Commission) proposed chronology, all publicly traded companies would have to use IFRS within six years if the plan goes forth.

    Companies required to observe IFRS and GAAP for three years while transitioning, the SEC function would expect to see three years’ worth of IFRS fair financial statements for each formation. This would be a very costly for U. S. companies. The SEC commercial document that US companies will spend between 0. 125 proportion and 0. 13 percent of their taxation on transitioning to IFRS from GAAP in the first year of filing alone (Andrew Johnson and Leone, November 2008).

    All of the mentioned changes that will need to be made to accommodate the switch from GAAP to IFRS will not only present challenges to the industry, but they will also necessitate wide time and resources. These costs are unneeded and outweigh the public presentation of switching to IFRS. Based on an incremental analysis, the only cost benefit of switching to IFRS would be reduced scrutiny fees that would result in a cost of savings. IFRS is Inferior to U. S. GAAP Of course, GAAP is complicated with problems of its own. However, IFRS is inferior because GAAP are more reliable and consistent in their financial reporting standards.

    IFRS financial standards are not up to the quality of GAAP financial statements. Implementing a new system that demands a pricy and abhorred transition would irrational. Americans do not have awareness of what the repercussions on converting will be or even if IFRS will be successful in U. S. It is impossible for IFRS to compare to GAAP when it has faced only hardships throughout the decade. GAAP has been used greatly for discussion and interpretation on companies’ welfare for over 60 years. Chairman Cox along with other board members of IASB concur that IFRS are not the highest set of standards.

    Adopting IFRS over GAAP does not make sense for the U. S. that are proven as second-rate standards. GAAP outweighs the IFRS. The Flexibility of IFRS IFRS is obviously open to more internal representation, but it also needs promising communication tests that are necessary for exact and honest commercial enterprise, which is another explanation why the U. S. should not switch to IFRS. A change to a generalized-founded occupation will not produce correct and reliable results because of the shortage of ethical and economic principles in the current phase of governance and auditors (Bahnson and Miller, October 2008).

    It can be seen from past incidents, which accounting fraud is eminent in the U. S. By allowing generally accepted accounting practices to be replaced with IFRS, the note tests that now exist will be remote. A lack of enforcement will only make things easier for organizations to alter commercial enterprise statements. Outright fraud would be replaced by more subtle capital of payment management due to the fact that interpretation will be left up to the legal opinion of management (Top Ten Reason, September 2008). Rule-based accounting standards are also necessary in the U. S.

    for helping investors because companies must report all transactions in the same way, making financial statements more comparable (Albrecht, November 2008). For example, Bernard Ebbers, was convicted in March 30, 2005 for his part in the $11 billion accounting fraud at WorldCom that was the biggest in a wave of corporate scandals at Enron, Adelphia, and other companies. On June 25, 2002, WorldCom admitted to $3. 85 billion in accounting misstatements (the figure eventually grew to $11 billion). This initiated a series of investigations and legal proceedings, which naturally focused on Ebbers, WorldCom’s then-CEO.

    A federal jury found Ebbers, 63, guilty of securities fraud, conspiracy and filing false documents with regulators. He was sentenced to 25 years. The amount of bright line rules is not something the U. S. needs and losing these rules would have adverse outcomes for those involved. There was no integrity in the corporation in which Mr. Ebbers regulators were aware but did not report the unethical behavior. Regulators contributed to falsely reporting financial statements putting up a smoke screen on how bad the company’s severity. No cornerstone of accounting can stop fraud, but rules-based accounting can at least prevent it from taking place.

    Conclusion Adopting IFRS and neglecting GAAP is not the right command for the U. S. There are many reasons to refute this, such as the high reimbursement associated with changeover from GAAP to IFRS, less comparability between business enterprise financial statements, the actuality that IFRS is subscript to GAAP, and most definitely that IFRS lacks the assets of regulation and vivid air rules that are necessary in the U. S. Shifting to IFRS would be a pivotal, high-priced transition and the overall costs of the shift outweigh the profit. Many of those pushing for IFRS in the U. S. are just striving for it out of their own self-regards.

    It is unbelievable to know that a relative measure of those pushing for IFRS are only doing this since it will direct it easier for them to make their numbers and will not be second-ventured by auditors, capitalist, or the Circular function. This is not the technique that financial reporting in the U. S. needs to follow and enforce IFRS in the near trade valid in the U. S. will only make to undesirable outcomes. GAAP is the best plan of action for the U. S. IFRS is not compatible with the U. S. neither is it in the U. S. political cost to authorize the new business enterprise reference.

    Revision of Unit 5 Letter to Editor To whom this may concern: The United States is currently going through a big decision. The Securities and Exchange Commission is still debating whether to withdraw U. S. GAAP in use of IFRS. They are also reevaluating if businesses such as private and non-profit organizations that make less than $55 million will have to comply with IFRS. If the U. S. has practiced GAAP for over 6 decades switching to IFRS becomes questionable. IFRS is not substantial so it will be unwise to overthrow GAAP. It takes knowing the rules in order to refrain from being misled.

    Since IFRS does not really have rules, managers can mislead their staff and patrons. It is advisable for companies to ensure that they can have certainty. Having integrity is key however, having independent judgment on how to run the book numbers should not compromise ethics with self-interest. Learning about the incident with WorldCom scandal has definitely made aware. WorldCom CEO Bernard Ebbers, was tried and convicted of overseeing in $11 billion fraud. The incident consisted of a continuous pattern of accumulating expenses as long-term capital expenditures known as assets.

    Part of this ordeal lead to WorldCom going bankrupt in which the company was already losing money due to Mr. Ebbers frequent embezzlement but the staff pardoned into falsely reporting the numbers. It is the duty of the staff to provide and report helpful information as well as making ethical decisions to be trustworthy and useful for the corporation. I am majoring into Accounting, I have to be on my Ps and Qs of professionalism/good ethics. It is prevalent for companies to report the numbers by choice to their financial reports and use that to their advantage to boost net income and sales figures.

    Improper management leads to fraud like false information, misusing funds, overstating/understating revenues, and underreporting the existence of liabilities. Regardless of the company gaining or losing income on an annual basis, everyone should make rational, financial decisions for the company’s sake. Many Accountants believe in doing things by the book since whatever the intention may be in spite of making the company look if it goes against the code of ethics it should not be executed. Doing business the honest way can result in a company being debt-free allowing it to expand.

    Thank you for your time and reaching out to me through my letter. Very Respectfully, Amethyst McMillian Multimodal Project (Unit 7) My multimodal project is presentation that I have put together using the Microsoft power point highlighting the major components of IFRS vs. U. S. GAAP. The layout for the presentation followed by the pictures that I selected to for my presentation really stand out. Whenever people hear of anything associated with the business indeed, it has something to with money. Looking back at my new presentation, I can agree that I have improved from my previous power point.

    I wanted to make this one as creative as possible to give my viewers a colorful purpose to tune into the slideshow. I was looking for other types of arts to insert to my presentation but this particular topic heavily concerns currency. The slideshow consists of ten slides, of a brief but thorough walkthrough of the IFRS. I tried to insert graphs in comparison and contrast to IFRS vs. U. S. GAAAP needless to say, it did not turn out the way I’d planned. I still believe that the presentation turned out fair which to me it is like a field trip. Every slide delivers a message with creative imagery and sound effects.

    Unfortunately, I wasn’t able to include all of my references so I selected the key point of IFRS from first 7 sources that were utilized. Here is a brief outline of my presentation covering IFRS and why the U. S. should abandon U. S. GAAP to switch to IFRS. Slide 1:Opening of the slideshow Slide 2:IFRS Slide: 3The reason behind adopting IFRS. Slide: 4The major difference between IFRS and its disadvantages. Slide: 5 The issues that remain with the adoption of IFRS and the disadvantages. Slide: 6The U. S. can prevent improper management, and fraud if they retain IFRS.

    Slide: 7WorldCom Scandal Slide: 8Presentation Walkthrough Slide: 9References Slide: 10Ending Reflection To be frank, I still believe that I still have a long way to go. As far as being a creative writer, I am there at the margin. However, as far as becoming an effective writer relating the source of research, I not quite crossed the milestones to inform me that I am at my apex. I believe that ability to be able to articulate my information my writing a start because it indicates that I take my work seriously so others will not have some sort of emptiness as they read.

    Throughout the course I have learned to relax and break out of the cycle of trying to be perfect and avoid anticipating everything that I write. I have learned that when I anticipate everything that I do in order to perform effectively and efficiently, it will all become questionable. I am glad to in which I was able to bond with free writing. The use of free writing has helped me with my opening and closing paragraphs of my essays. Especially my opening paragraph since I policed myself to work on building my opening statements last which really helped.

    It helped me to tie everything into perspective. Feedback serves a real benefactor because not only did I learn from weaknesses and strengths of writing but I have also learned from my classmates. The professor’s remarks shape up my motivation because she always points out what is recommended and how I can do better to make my writing effective. I have registered for a new Language Arts course because I want to become an effective writer. I will take all of the information that I have learned from this week’s final Seminar and apply it throughout all of my writing tasks further and beyond.

    I plan on publishing some of my work that I have written over the past years and I want to become a stronger writer. Utilizing everything that I have learned from this Unit will not only teach me how to be an effective writer but also an effective communicator; since I want to articulate efficiently as I write or when I speak. References Albrecht, David (2008, October 01). Benefits and Costs to U. S. Adoption IFRS. Retrieved from: http://www. profalbrecht. wordpress. com/2008/10/01/benefits-and-costs-to us-adoption-of-ifrs/html. [Last Accessed 17 November 08]. Bahnson, Paul R and Paul B. W.

    Miller (2008). The Spirit of Accounting: What Good are Principles Without Principles? Accounting Today 22. Retrieved from: http://0search. ebscohost. com. maurice. bgsu. edu/login. aspx? direct=true&db=bth&AN=34695786&loginpage=login. asp&site=ehost-live&scope=site. html. [Last Accessed 17 November 2008. ] Cox, Christopher (2008 November 18). Speech by SEC Chairman: ‘The Future of International Standards and Cooperation In Light of the Credit Crisis’. Retrieved from: http://www. sec. gov/news/speech/2008/spch111808cc. html. [Last Accessed 23 November 2008]. Crawford, Krysten (2005 September 25).

    Ebbers gets 25 years. Retrieved from: http://www. money. cnn. com/2005/07/13/news/newsmakers/ebbers_sentence. Diamond, Marc and George Hermann (2008). GAAP? IFRS? What you need to know. San Antonio Business Journal, 1 August. Retrieved from: http://www. bizjournals. com/sanantonio/stories/2008/08/04/editorial2. html. [Last Accessed 17 November 2008]. IFRS-vs-U. S. GAAP. Accounting and Fraud. (2013 May 5). Fraud in the Business World. Retrieved from http://www. securitieslawfirms. com/fiduciaryresponsibility/accounting-fraud. html. Johnson, Sarah and Leone, Marie. (2008 November 17). SEC: Early IFRS

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