The International Financial Reporting Standards (IFRS) are used in preparation of financial statements. These standards are created by the International Accounting Standards Board (IASB). These standards are currently required or permitted in over one hundred countries. Some of the countries using these standards include Russia, Australia, Singapore, South Africa, Saudi Arabia, and every country in Europe (The European Union). Many countries are also in the midst of converting to IFRS. Some of these countries include Canada, Japan, Mexico, India, and the United States.  The United States is currently using Generally Accepted Accounting Principles (GAAP). These principles are set by the Financial Accounting Standards Board (FASB). However, in 2008, the United States Securities and Exchange Commission (SEC) set up a roadmap on the conversion to IFRS from GAAP. This roadmap set 2014 as the proposed year in which the mandatory adoption to IFRS would begin. The SEC has planned to meet in 2011 to decide if they should set an exact date for the adoption of these standards. The question is though, should the United States really be switching to International Accounting Standards.
      The United States should implement IFRS in place of GAAP to go along with the rest of the countries using these standards. The world is getting more globalized as more and more countries increasingly become more developed, and this causes a strong need for common financial standards to be used across the world. The United States is one of the most advanced countries in the world, and they need to join all of the countries currently using International Standards. Having the same financial standards would create a ton of benefits for the United States and other countries as well.
The main benefit is that United States companies will have a better understanding of the global market with countries using the same accounting standards. They will understand better, because they now will have comparable financials to all the foreign countries using IFRS. American and foreign companies would be able to better compare financial statements with one another. These comparable financial statements would give American companies easier access to foreign markets, and would also give them a better chance to produce foreign capital.  Investors will also benefit from comparable financials, because they will finally be able to fully compare American and foreign companies. This could lead to a large increase in foreign investment. American and foreign investors will be able to get as much as possible out of their investment through a global standard of financials. Another benefit of IFRS is that it would help cut the costs of some American companies. Like, I said earlier the world is more globalized now than ever before, and globalization will continue to increase. There are a lot of companies in the United States right now that have domestic and foreign operations, and these companies are required to fill out two sets of books right now. One under GAAP, and the other set follows IFRS.  The adoption of IFRS will allow these companies to cut costs by only having to fill out one set of books.  However, there are some disadvantages to switching to IFRS.
               The major drawback in switching to International Standards is the transition. Companies will have to learn the International Standards, and they will have to educate and train all of their current employees along with new employees. This will be a very costly period for a lot of companies especially if they are not prepared for the transition. The other disadvantage is that college education courses will have to completely change. All of the teachers will have to learn IFRS, and institute that into the classes in replace of Generally Accepted Accounting Principles. Transitioning to IFRS will be extremely difficult during the first few years, but it will become easier once college graduates come out educated in International Standards. Companies and colleges can counter this tough transition by being prepared for it as soon as they know the switch to IFRS will be taking place for sure. With advanced notice of the switch companies can begin training their current employees before the new standards are put in place, and colleges can start implementing IFRS into their curriculum. I am an accounting major, and during a few of my classes we’ve touched on differences between IFRS and GAAP.
               The United States switching to International Financial Reporting Standards should be done, because it would be a great benefit to the U.S. as well as other countries. Even with a tough transition period the switch to International Standards must be done in order to create global accounting standards which will better improve the global market.
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