XBRL Projects

Each region of the world has prepared for and began using XBRL in one way or another.  Some areas have created “projects” to track their XBRL progress.  The XBRL International has a great source for finding these various projects at http://www.xbrl.org/knowledge_centre/projects/map.  There are approximately 130+ projects around the world in various stages from prototype to development to pilot to implemented.  According to the projects list and map maintained by XBRL International, the majority of the projects are located in Europe (~32 projects) and a mere 15 projects in the United States, mostly on the east coast.  The map allows you to scan the globe and receive quick information of each project.  You can also use the map’s information bubbles to look into each project with more detail.   

The two projects that I want to focus on today are the EBA XBRL Project and the Oregon CAFR Project.  We’re going to look at how XBRL is being used by each project.  We’ll learn what tools we would need to implement our own XBRL project.

 

EBA stands for the European Banking Authority.  They have joined efforts with the European Insurance and Occupational Pensions Authority (EIOPA) to form the Eurofiling project.  They have collaborated with XBRL Europe, stakeholders, schools, and individuals.  The group is comprised of volunteers, regardless of their affiliations.  According to their website, Eurofiling welcomes “employees of any supervisor, reporting entity or XBRL industry/organization, as well as academics or any other interested people” (Eurofiling Initiative, 2013).

 

In 2005, the Committee of European Banking Supervisors created COREP (Common Reporting) “to achieve a common solvency ratio reporting framework for credit institutions and investment firms under the EU capital requirements regime” (Eurofiling Initiative, 2013).  The COREP taxonomy was published in March 2006 and in late 2006 FINREP (Financial Reporting), the code-named reporting for IAS/IFRS, and COREP projects were implemented (Eurofiling Initiative, 2013).  The Eurofiling Initiative is responsible for getting the whole region using the same standards for reporting.

 

 

Comprehensive Annual Financial Report (CAFR) was created by the State of Oregon to promote transparency and innovation.  The state is not required to report using XBRL at this time; however, they took the initiative to get on board and lead the pack of governmental units.  It was created by the Department of Administrative, it is audited by the Secretary of State Audits Division, and it is published for the Governor and citizens of the State of Oregon and for public consumption.  The goal was “to build an XBRL taxonomy for government accounting standards used by state and local governments for financial reporting and then express the state’s CAFR using XBRL” (Hoffman & Watson, 2010).  In 2010, there were about 88,000 state and local government units using it (Hoffman & Watson, 2010).

 

The Oregon State Controller, John Radford, was quoted saying the following when considering the need for XBRL:

 

“Our XBRL investments in an efficient global marketplace today will help sow the seeds for lower interest cost tomorrow.  For government financial statement preparers, the marginal cost to convert existing financial reports in XBRL will increase market efficiency and that’s a good thing.  Our experience in Oregon is that the actual cost is slightly more than converting existing files from spreadsheets and word processors to XBRL.  As market players convert to XBRL, state and local governments should be ready.”

 

The CAFR project is now the leader in the US for government reporting.  If you take a look at the state’s website at www.oregon.gov you can find a whole section on transparency.  They have dedicated the resources to make the state’s government transparent for its people.  They have chosen to be proactive with reporting and serve as a role model for all government entities.

 

 

Thinking about starting your own XBRL project at your employer?  As the world uses XBRL more and more, there is XBRL software popping up all around us.  The one that I’m going to look into is Dragon View XBRL from Rivet Software.  According to the Rivet Software website, the Dragon View program “helps ensure compliance with the SEC XBRL reporting requirement” (Rivet Software, 2013).  The site explains that Dragon View can “ensure XBRL filings comply with the [SEC] mandate, from viewing basic instance properties and verifying presentations and calculations, to confirming complete XBRL packages”; offer you “confidence and peace of mind that the XBRL filing tags are accurate and consistent across the entire filing”; and offer conformity by allowing the users to “pinpoint extensions and their related details” (Rivet Software, 2013).  Dragon View was created to allow users to work more efficiently and reduce issues.  Here’s a list of some of the software’s features (Rivet Software, 2013):

§  Identify instance/taxonomy versions and other properties

§  Ensure XBRL Tagging is accurate and consistent with raw data and rendered data

§  Export to Excel, HTML, or listing of full facts “working papers”

§  Analyze extensions used in the specific company taxonomy

§  Quick-search the standard taxonomy elements for possible recommendations

§  Filter and sort all XBRL facts in a specific filing to pinpoint what’s most important to the review

§  Assure the note tagging granularity is at the proper level

§  Verify the labels and label linkbase match the source

§  View the calculation hierarchy and automatically check summations in the calculation linkbase

§  Compare all presentation links and line item text via the rendered view, reviewer view, or data grid view

After this week’s research and after getting a better understand of XBRL and how it can make our lives more efficient…I’m thinking that an XBRL project at my employer may be around the corner for me!

 

 

 

 

 

References

 

Abraham, C., & Kull, J. (2008, November 19). AGA research study predicts bright future for XBRL use in state and local governments. accountingWEB. Retrieved from http://www.accountingweb.com/topic/aga-research-study-predicts-bright-future-xbrl-use-state-and-local-governments

 

admin. (2011, November 14). List of free XBRL tools. FinanceSheets.com, Retrieved from http://www.financesheets.com/list-of-free-xbrl-tool/

 

Beers, A. & Savage, M. (2010, January 7). The sec mandated xbrl. Corporate Finance Insider, Retrieved from http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2010/CorpFin/SEC_XBRL.jsp

 

European Banking Authority, EIOPA, & XBRL Europe (2013). About us. Retrieved from http://www.eurofiling.info/about_us/about_us.shtml

 

Hoffman, C., & Watson, L. (2010). XBRL For Dummies. Indianapolis, IN: Wiley Publishing, Inc.

 

Mueller, D. (2009, June 25). Public Sector Case Study: State of Oregon CAFR Project. Retrieved from http://archive.xbrl.org/19th/sites/19thconference.xbrl.org/files/Microsoft PowerPoint - JustSystems Mueller XBRL

 

Ramin, K. & Reiman, C. (2013). IFRS and XBRL: How to improve Business Reporting through Technology and Object Tracking. John Wiley & Sons, Ltd.

 

Rivet Software. (2013). Dragon View. Retrieved from http://rivetsoftware.com/solutions/quality-control/dragonview/

 

State of Indiana. (2012). 2012 CAFR. Retrieved from http://www.in.gov/auditor/2530.htm

 

State of Oregon. (2012). Oregon Transparency: get to know state government. Retrieved from http://www.oregon.gov/transparency/Pages/index.aspx

 

XBRL Espana. (2011, August 14). CEBS Why is XBRL recommended to be used? Retrieved from http://www.xbrlwiki.info/index.php?title=CEBS_Why_is_XBRL_recommended_to_be_used?

 

XBRL International. (2013). XBRL Projects [demographic map]. Retrieved from http://www.xbrl.org/knowledge_centre/projects/map

 

XBRL International. (2013). EBA XBRL Project. Retrieved from http://www.xbrl.org/project/eba-xbrl-project

XBRL International. (2013). XBRL and Public Sector Financial Reporting: Oregon CAFR Project. Retrieved from http://www.xbrl.org/project/xbrl-and-public-sector-financial-reporting-oregon-cafr-project

IFRS Taxonomy, US GAAP Taxonomy, and XBRL

The big push in the XBRL world is to come up with one, unified, taxonomy that can be used globally.  Having a single taxonomy is important since transparency is the most important thing here.  But to fully achieve transparency, the taxonomy has to be able to work with all types of businesses.  As I discussed in my last post, the two leading taxonomies are being created by IFRS and US GAAP.  Let’s explore the two taxonomies a little more.  IFRS and US GAAP have been trying to converge for years…but is it working?  Do we need more than one taxonomy?

The US Securities and Exchange Commission required all public companies to report financial statements using XBRL starting in 2009, making it a “global leader in its use of XBRL to achieve regulatory compliance” (Brands, December 2012).  The requirements were phased in over three years.  In 2011, the final phase of the requirement that affects small-cap and Foreign Private Issuers (FPIs) went into effect (Brands, 2011).  Since most of the world has already accepted the IFRS XBRL taxonomy (xIFRS), the FPI’s have chosen to use it.  The problem is that they are not meeting the requirements of the SEC.  “The first xIFRS taxonomy was issued in late March 2011, barely a quarter before the FPI’s filing requirement date” and “two years after the first US GAAP Financial Reporting Taxonomy (UGT)” (Brands, 2011).  The SEC was concerned that it “didn’t have enough time to review and approve the xIFRS taxonomy, a step required by the mandate” (Brands, 2011).  It was also discovered that the taxonomy was inadequate in the number of concepts and that it didn’t account for “common IFRS financial reporting practice concepts such as sales and aggregated sales and marketing expense” (Brands, 2011).  For 2011, the SEC issued a ‘No Action’ letter since it had not accepted xIFRS.

 
Now, I’m no expert (obviously, that’s why this is called An XBRL Experience)…but the following facts just blew my mind and I’m questioning why the US is trying so hard to converge with IFRS.  “The 2011 UGT includes about 15,000 financial reporting elements with several industry entry points, such as the Commercial and Industrial Taxonomy that applies to most companies.  The 2011 xIFRS taxonomy weighs in at about 2,500 concepts” (Brands, 2011).   You may ask why there is such a great difference in the number of concepts.  Well, the xIFRS initially only addressed IFRS disclosure requirements.  According to Kristine Brands, “common financial reporting concepts and local, jurisdictional, and industry-/company-specific reporting requirements weren’t included” (Brands, 2011).  When the number of concepts is limited like this, to meet disclosure requirements a company must add extensions.  Adding extensions defeats the purpose of XBRL reporting that was supposed to make financial reporting easier to compare.  It is hard to compare components that have been “added” to the reporting by individual companies versus a uniformed concept that could be included in the reporting.  The IFRS has modified their focus to include common financial concepts.

In July 2012, the adoption of IFRS by the U.S. made the news, yet again.  This time it was with regards to the final report by the SEC on the Work Plan to incorporate IRFRS in the US.  “The report suspended the project indefinitely, causing a major setback to the global accounting community’s objective to adopt one single set of high-quality accounting standards” (Brands, September 2012).  Even though the US acceptance of IFRS project is delayed, the International Accounting Standards Board (IASB) is continuing to make progress to improve “the robustness of the IFRS XBRL taxonomy” (Brands, September 2012).  They have added approximately 1,200 tags, taking the total to approximately 3,770 (Brands, September 2012).  One reason that the IFRS is receiving so much resistance by the SEC is because xIFRS “filings are mostly for tax and banking/insurance regulation reporting, not for statutory financial reporting of publicly listed companies as in the SEC’s 2009 XBRL reporting mandate” (Brands, September 2012).

So what is the story on the convergence between IFRSs and US GAAP?  Their history begins in 2002 when the two standards boards began working together to create “a common set of high quality standards” (IFRS Foundation, 2013).  Their goal is to remove the differences between the two sets of standards.  They have achieved many things and are moving forward to reach their ultimate goal.  One way that they are work together is to develop common standards where the FASB (Financial Accounting Standards Board) and the IASB issue standards to their respective standards counterparts (US GAAP and IFRS).  Eventually, “the two sets of standards are expected to both improve in quality and become increasingly similar if not the same” (Financial Accounting Standards Board, 2012).

In July 2012, the SEC released a final report on the IFRSs.  The SEC spent almost two years analyzing the issues of the US incorporating IFRSs into the financial reporting requirements.  In response, the IFRS “issued a statement indicating their commitment to give careful consideration to the report’s observations” (Byatt, 2012).  The response was commented on by Michel Prada, Chairman of the Trustees {of IFRS Foundation} (Byatt, 2012):

"In their February 2010 statement on global accounting standards, the SEC Commissioners’ reaffirmed their strong commitment to a single set of global standards and the recognition that IFRSs were best placed to serve that role for US markets. The statement directed SEC staff to develop and execute a work plan to support this process and the final SEC Staff Report on IFRS was published in July 2012.

The IFRS Foundation staff analysis released today complements the findings of the SEC Staff Report with academic research as well as the experiences of other jurisdictions that have already completed their own transitions to IFRSs. Accordingly, the analysis should also be of use to other jurisdictions that are evaluating whether and how to adopt IFRSs.

While acknowledging the challenges, the analysis conducted by the IFRS Foundation staff shows that there are no insurmountable obstacles for adoption of IFRSs by the United States, and that the US is well placed to achieve a successful transition to IFRSs, thus completing the objective repeatedly confirmed by the G20 leaders."

In the meantime, while we wait to see if the US will adopt the IFRS XBRL taxonomy…the FASB is moving forward with the US GAAP Financial Reporting Taxonomy.  The 2013 version was made available on December 21, 2012 (Eyden, 2012).  The Financial Accounting Foundation (FAF) is responsible for maintenance of the taxonomy.  Working with the FASB, they keep the taxonomy up-to-date with changes in US GAAP…”identifying best practices in taxonomy extensions, and technical enhancements” (Eyden 2012).

Is it possible to have two taxonomies?  While yes, it is physically possible to have two taxonomies…the real question is do we (as a global market) want two taxonomies?  I mean, if the whole goal here is to be able to compare companies ‘apples-to-apples’…then don’t all companies need to be reporting the same stuff in the same manner?  In my opinion, the problem isn’t that a universal language for reporting can’t exist…it’s that the IFRS and US GAAP have too many differences in what the basic standards are which leads to differences in financial reporting which means that setting one standard is difficult.

 

References

Brands, K. (2010, October). The Buzz about XBRL and Interactive Data. Strategic Finance Magazine, 64-65.

Brands, K. (2011, October). A Tale of Two Taxonomies. Strategic Finance Magazine, 56-57.

Brands, K. (2012, September). Update on the IFRS XBRL Taxonomy – 2012. Strategic Finance Magazine, 64-65.

Brands, K. (2012, December). The SEC and Interactive Data. Strategic Finance Magazine, 56-57.

Byatt, M., & Welsh, C. (2012, October 23). Trustees publish IFRS Foundation Staff Analysis of SEC Final Staff Report on IFRS. Retrieved from http://www.ifrs.org/Alerts/PressRelease/Pages/IFRS-Foundation-Staff-Analysis-of-SEC-Final-Staff-Report-on-IFRS.aspx

Eyden, T. (2012, December 24). US GAAP Financial Reporting Taxonomy Now Available. Retrieved from http://www.accountingweb.com/article/us-gaap-financial-reporting-taxonomy-now-available/220562

Financial Accounting Standards Board. (2012, April 5). International Convergence of Accounting Standards - Overview. Retrieved from http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156245663

IFRS Foundation. (2013, February). Convergence between IFRSs and US GAAP. Retrieved from http://www.ifrs.org/Use-around-the-world/Global-convergence/Convergence-with-US-GAAP/Pages/Convergence-with-US-GAAP.aspx

Kaiser, J. (2012, December 19). A Spotlight on the FASB’s and IASB’s Projects. Setting the standard, DOI: www.pwc.com/us/jointprojects

Pryde, C. (2012, 0419). The Use of Technology to Better Target Benefits and Eliminate Waste, Fraud, and Abuse. Prepared Testimony to the Subcommittee on Human Resources, Washington, D.C.

Ramin, K. & Reiman, C. (2013). IFRS and XBRL: How to improve Business Reporting through Technology and Object Tracking. John Wiley & Sons, Ltd.

 

 

 

XBRL, Taxonomy, IFRS, and US GAAP

To completely understand XBRL and its importance to businesses in the future, one must first know what it is.  XBRL, technically speaking, “is a digital ‘language’ that was developed specifically to communicate information between businesses and other users of financial information” (IFRS Foundation, 2011), like investors, regulators (like the SEC), and analysts.  XBRL does not change the data being reported, it just offers “a common, electronic format for business reporting” (IFRS Foundation, 2011).  As companies are being required to become more and more transparent and so many companies are in the international market, it is important that there is a place where this data can easily be reported, extracted, to then be analyzed.

 

For XBRL to work correctly, it uses taxonomies.  What are taxonomies?  Well, they are “the computer-readable ‘dictionaries’ of XBRL that provide definitions for XBRL tags, information about the tags, and organize the tags into a meaningful structure” (IFRS Foundation, 2011).  Taxonomies can differ in their uses and in their standards.  The IFRS (International Financial Reporting Standards) has a goal “to develop a single set of high quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated accounting principles”(Ramin & Reiman, 2013).  They have created their own taxonomy, called the IFRS Taxonomy.  The IFRS Foundation creates and publishes XBRL tags for all of the IFRS disclosures.  The IFRS Taxonomy contains and organizes all of these tags.   The ultimate goal of IFRS is to get the world to use a “common language for financial reporting” (IFRS Foundation, 2011) and to use XBRL for “a common format for business and financial reporting” (IFRS Foundation, 2011).

 

In the United States, we are ‘governed’ in the financial world by US GAAP (Generally Accepted Accounting Principles).  The SEC has started requiring all public companies to begin reporting using XBRL, rules issued January 30, 2009.  The question is now, what taxonomy do we use so that the ‘meaning’ of the data is consistent?  Next we will review the IFRS and US GAAP, similarities and differences.

 

The concepts of IFRS and US GAAP are more similar than they are different; however, the differences are significant and could have substantial financial repercussions on US businesses.  To completely understand the two standards, let’s look at a few of the main areas of concern for US businesses to see their similarities and differences:  financial statement presentation, inventory, intangible assets, and leases.

 

Financial Statement Presentation

Both standards are similar in the sense that financial statements include a balance sheet, income statement, statement of cash flows, and notes to the financial statements.  Both of the standards require that the financial statements use accrual basis accounting with rare exceptions, like with the statement of cash flow.  Finally, both standards are similar with regards to materiality and consistency that must be considered when preparing financial statements.

According to US GAAP versus IFRS: The basics by Ernst & Young, the two standards differ with regards to financial statement presentation in the following ways:

 

Topic	US GAAP	IFRS
Financial periods required	Generally, comparative financial statements are presented; however, a single year may be presented in certain circumstances.  Public companies must follow SEC rules, which typically require balance sheets for the two most recent years, while all other statements must cover the three-year period ended on the balance sheet date.	Comparative information must be disclosed with respect to the previous period for all amounts reported in the financial statements.
Layout of balance sheet and income statement	No general requirement within US GAAP to prepare the balance sheet and income statement in accordance with a specific layout; however, public companies must follow the detailed requirements in Regulation S-X.	IAS 1, Presentation of Financial Statements, does not prescribe a standard layout, but includes a list of minimum items. These minimum items are less prescriptive than the requirements in Regulation S-X.
Presentation of debt as current versus non-current in the balance sheet	Debt for which there has been a covenant violation may be presented as non-current if a lender agreement to waive the right to demand repayment for more than one year exists prior to the issuance of the financial statements.	Debt associated with a covenant violation must be presented as current unless the lender agreement was reached prior to the balance sheet date.
Income statement - classification of expenses	SEC registrants are required to present expenses based on function (e.g., cost of sales, administrative).	Entities may present expenses based on either function or nature (e.g., salaries, depreciation). However, if function is selected, certain disclosures about the nature of expenses must be included in the notes.

 

Inventory

Both standards agree that the primary basis of accounting for inventory is cost.  Both use the definition of inventory as the “assets held for sale in the ordinary course of business, in the process of production for such sale or to be consumed in the production of goods or services” (Ernst & Young, 2011).  The significant differences between the two standards, according to US GAAP versus IFRS: The basics by Ernst & Young, are outlined below:

Topic	US GAAP	IFRS
Costing methods	LIFO is an acceptable method. Consistent cost formula for all inventories in nature is not explicitly required.	LIFO is prohibited. Same cost formula must be applied to all inventories similar in nature or use to the entity.
Measurement	Inventory is carried at the lower of cost or market. Market is defined as current replacement cost, but not greater than net realizable value (estimated selling price less reasonable costs of completion and sale) and not less than net realizable value reduced by a normal sales margin.	Inventory is carried at the lower cost or net realizable value. Net realizable value is defined as the best estimate of the net amount inventories are expected to realize.
Reversal of inventory write-downs	Any write-down of inventory to the lower of cost or market creates a new cost basis that subsequently cannot be reversed.	Previously recognized impairment losses are reversed up to the amount of the original impairment loss when the reasons for the impairment no longer exist.
Permanent inventory markdowns under the retail inventory method (RIM)	Permanent markdowns do not affect the gross margins used in applying the RIM. Rather, such markdowns reduce the carrying cost of inventory to net realizable value, less an allowance for an approximately normal profit margin, which may be less than both original cost and net realizable value.	Permanent markdowns affect the average gross margin used in applying the RIM. Reduction of the carrying cost of inventory to below the lower of cost or net realizable value is not allowed.

 

Intangible Assets

Both standards define intangible assets as “nonmonetary assets without physical substance” (Ernst & Young, 2011).  Both standards require that the recognition criteria be probable future economic benefits and cost that can be reliably measured.  Both state that internally developed intangibles are not recognized as assets.  Both standards require that “internal costs related to the research phase of research and development are expensed as incurred” (Ernst & Young, 2011).  The major differences with regards to intangible assets are listed here, as defined by US GAAP versus IFRS: The basics by Ernst & Young:

Topic	US GAAP	IFRS
Development costs	Development costs are expensed as incurred unless addressed by guidance in another ASC Topic. Development costs related to computer software developed for external use are capitalized once technological feasibility is established in accordance with specific criteria (ASC 985-20). In the case of software developed for internal use, only those costs incurred during the application development stage (as defined in ASC 350-40, Intangibles — Goodwill and Other — Internal-Use Software) may be capitalized.	Development costs are capitalized when technical and economic feasibility of a project can be demonstrated in accordance with specific criteria, including: demonstrating technical feasibility, intent to complete the asset, and ability to sell the asset in the future. Although application of these principles may be largely consistent with ASC 985-20 and ASC 350-40, there is no separate guidance addressing computer software development costs.
Advertising costs	Advertising and promotional costs are either expensed as incurred or expensed when the advertising takes place for the first time (policy choice). Direct response advertising may be capitalized if the specific criteria in ASC 340-20, Other Assets and Deferred Costs — Capitalized Advertising Costs, are met.	Advertising and promotional costs are expensed as incurred. A prepayment may be recognized as an asset only when payment for the goods or services is made in advance of the entity having access to the goods or receiving the services.
Revaluation	Revaluation is not permitted.	Revaluation to fair value of intangible assets other than goodwill is a permitted accounting policy election for a class of intangible assets. Because revaluation requires reference to an active market for the specific type of intangible, this is relatively uncommon in practice.

 

Leases

Overall, the accounting for leases requirements for both US GAAP and IFRS is similar; however, US GAAP guidance is more specific in application.  According to Ernst & Young, “both focus on classifying leases as either capital or operating, and both separately discuss lessee and lessor accounting” (Ernst & Young, 2011).  There are three major areas of difference between US GAAP and IFRS that pertain to the lease of real estate and recognition of gain/loss on a sale and leaseback when leaseback is either an operating or capital leaseback.  The table below details these differences, as defined by US GAAP versus IFRS: The basics by Ernst & Young:

Topic	US GAAP	IFRS
Lease of real estate	A lease of land and buildings that transfers ownership to the lessee or contains a bargain purchase option would be classified as a capital lease by the lessee, regardless of the relative value of the land. If the fair value of the land at inception represents less than 25% of the total fair value of the lease, the lessee accounts for the land and building components as a single unit for purposes of evaluating the 75% and 90% tests noted above. Otherwise, the lessee must consider the land and building components separately for purposes of evaluating other lease classification criteria. (Note: Only the building is subject to the 75% and 90% tests in this case.)	The land and building elements of the lease are considered separately when evaluating all indicators unless the amount that would initially be recognized for the land element is immaterial, in which case they would be treated as a single unit for purposes of lease classification. There is no 25% test to determine whether to consider the land and building separately when evaluating certain indicators.
Recognition of a gain or loss on a sale and leaseback when the leaseback is an operating leaseback	If the seller does not relinquish more than a minor part of the right to use the asset, gain or loss is generally deferred and amortized over the lease term. If the seller relinquishes more than a minor part of the use of the asset, then part or all of a gain may be recognized depending on the amount relinquished. (Note: Does not apply if real estate is involved, as the specialized rules are very restrictive with respect to the seller’s continuing involvement, and they may not allow for recognition of the sale.)	Gain or loss is recognized immediately, subject to adjustment if the sales price differs from fair value.
Recognition of a gain or loss on a sale-leaseback when the leaseback is a capital leaseback	Generally, same as above for operating leaseback in which the seller does not relinquish more than a minor part of the right to use the asset.	Gain or loss deferred and amortized over the lease term.

 

These are just some of the similarities and differences between IFRS and US GAAP.  While the US has made strives to comply with IFRS standards, we still have a long way to go.  One big difference between US GAAP and IFRS that will always be present is that US GAAP is rule-based while IFRS is principle based, which leads to open interpretation in IFRS.  One of the major complaints by US companies is that the expense to change their processes will be so great at a time when we are just starting to recover from the recessionary times.  Many companies are torn on their feelings of whether going to IFRS will make a difference or not for them.  While many investors look forward to being able to compare companies world-wide on a level playing ground.

 

 

References and Works Cited

 

Epstein, B. (2012). IFRS versus GAAP. Retrieved from http://www.ifrsaccounting.com/ifrs-gaap.html

Ernst & Young. (2011, December). US GAAP versus IFRS. Retrieved from http://www.ey.com/Publication/vwLUAssets/US_GAAP_v_IFRS:_The_Basics/$FILE/US%20GAAP%20v%20IFRS%20Dec%202011.pdf

 

Forgeas, R. (2008, June 16). Is IFRS that different from US GAAP? Retrieved from http://www.ifrs.com/overview/General/differences.html

 

Hynek, A. (2011, November 28). What a switch from GAAP to IFRS may mean for investors. Retrieved from http://www.foxbusiness.com/personal-finance/2011/11/28/what-switch-from-gaap-to-ifrs-may-mean-for-investors/

 

IFRS Foundation. (2011, March). Snapshot: The IFRS Taxonomy. Retrieved from www.ifrs.org/xbrl

 

International Accounting Standards Board. (2009). IFRS for SME: Illustrative Financial Statements and Presentation and Disclosure Checklist. London: IASCF

 

Kaiser, J., Kuykendall, K., & Davis, T. (2012, October). IFRS and US GAAP: similarities and differences. Retrieved from http://www.pwc.com/us/en/issues/ifrs-reporting/publications/ifrs-and-us-gaap-similarities-and-differences.jhtml

 

Ramin, K. & Reiman, C. (2013). IFRS and XBRL: How to improve Business Reporting through Technology and Object Tracking. John Wiley & Sons, Ltd.

 

U.S. Securities and Exchange Commission. (2010, January 08). Interactive Data and Financial Statements. Retrieved from http://www.sec.gov/spotlight/xbrl/financial-statements.shtml