GAAP vs IFRS
GAAP vs IFRS: Opposing the Proposed Shift
There has been a growing demand over the past twenty years to unite the business world under one conceptual framework for reporting financial statements. Currently, there are two types of frameworks used throughout the accounting world. They are the General Accepted Accounting Principles ( GAAP) and International Financial Reporting Standards (IFRS), the SEC is currently considering a shift from United States GAAP to IFRS. My opposition to the United States shift from Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) is based on the following three reasons; the cost of implementation, training requirements, and increased profit manipulation risk.
Cost of IFRS
Cost is another disadvantage of IFRS. Small and large businesses would be affected by the transition. “It is estimated that it would cost each business $32 million dollars to convert from GAAP to IFRS” (Paul & Burks, n.d. p. 4).
The financial impact would be greater to small businesses compared to the large businesses. Large businesses have the available resources to train employees and implement the change. Small companies would have to bring in outside accountants or spend an exceptional amount of money to train employees and implement the change. Even if small companies used outside accountants, these accountants would be forced to retrain everything that they know about financial reporting. The retraining could cost a considerable amount of money that would likely lead to a substantial price increase in their services. A price increase would make it even more difficult for small businesses to afford the change.
U.S. companies are using GAAP to comply with the Security and Exchange Commission (SEC). Current and future accountants will have to relearn accounting based upon the IFRS vice using the GAAP...