One of the major differences between the two standards is going to be that whereas GAAP emphasizes rules, the IFRS is a principle-based approach. Implementing a principles-based approach has significant implications for American tax practice. Many of the specific differences between the two systems will have a direct impact on tax practice. In IFRS, LIFO is prohibited and inventory write-downs may be reversed in certain circumstances (Gill, 2007). The impact on tax practice will be a shift in emphasis on the profession towards finding ways to leverage the looseness of the principles in IFRS to lower the entity's tax burden.

The SEC announced in 2008 that IFRS could come to the U.S. As early as 2014. This move would impact on all publicly-traded U.S. firms (PriceWaterhouseCoopers, 2010). Accounting firms are already preparing for this shift. The most significant implication for the industry will be an increase in business as firms attempt to navigate the new rules. For years prior to IFRS and for years after, it is reasonable to expect that the role of tax accountancy will shift again, towards implementation of IFRS. This will create new work for the industry, in particular because the emphasis on the audit function and compliance is not expected to decrease.

Given the recent trends in tax accountancy, the impact of these changes should take two forms. The first will be a return to emphasis on minimizing tax requirements. During the implementation of period of IFRS, there is bound to be a slight reduction in regulatory oversight, or at the very least there will be opportunities to test the limits of the new principles. Tax accountants will once again be called upon to minimize the tax burden of their clients, in line with the new rules.

That said, the second major impact of the implementation of IFRS is that there will be substantial emphasis on compliance. Accounting firms will be cultivating IFRS specialists, whose role it will be to ensure compliance to the new standards throughout the change process. These specialists will also be called upon to find the best ways to reduce tax exposure under the new rules.

Given the sweeping nature of the shift towards IFRS, it is expected that demand for tax accountants will increase significantly in response to the new rules. Tax accountants will be called upon to perform all of their usual functions, but there will be a need for many more accountants in order to handle the addition work involved in implementing a new accounting system.

Even before IFRS is officially brought to the United States, the FASB has considered replacing FAS No. 109 with the IAS No. 12. The two standards were set to be included in the converge discussions, but the FASB is considering to essentially adopt the international standard outright (Whitehouse, 2008). This would have a significant impact on the tax accounting profession. The rules that have been used since 1992 would be removed entirely, and replaced with a new set of principles. The industry would be faced with a massive challenge in trying to adapt to the new standard. An entire sub-industry can be expected to arise specializing simply in IFRS compliance.

There are also going to be changes with respect to Financial Interpretation No. 48, which governs accounting for uncertainty in income taxes. The American and international standards disagree here as well. The international standard does not account for uncertainty in tax provisions. If the U.S. cannot have uncertainty incorporated in to the new standards, tax accountants will need to help firms address the issue of tax uncertainty. Tax accountants would need to analyze uncertain transactions and established a probability weight for them (Whitehouse, 2008). This would increase the importance of tax accountants under the new rules, if the international standard goes through.

A shift to international standards would also make the tax auditing role more complicated. Financial Interpretation No. 48 is viewed as contentious by executives in part because it "gives auditors a roadmap of where to look for trouble." International rules have no such disclosures. Since SOX was put into law, the tax audit function has become an increasingly important role for tax accountants. If these disclosures were removed, the audit function would be made much more difficult. The audit would still need to be performed, but without the disclosures the tax accountant would need to spend more time conducting the audit. Losing the disclosures would thus make it more difficult for tax auditors to...

The industry will be characterized by the need for companies to not only produce IFRS-compliant statements but also to find ways to work within the new guidelines to limit their tax liability. Maintaining compliance will also remain a key function, indicating that in the coming decade the tax accounting role will become more complex.
Conclusions

The tax accounting profession has change significantly in the past decade, and is going to be subject to significant change in the coming decade. The wave of accounting scandals in the early part of the 2000s heralded in an era of increased regulation and increased emphasis on compliance. The marketing of tax products, once a cornerstone of the tax accountant role, has been all but eliminated. Instead, tax accountants now emphasize the compliance function. The controls put in place by the Sarbanes-Oxley Act have guided this emphasis and the change in the types of revenues earned by accounting firms serves as evidence of the changing role of tax accountants.

The next major change in the role is going to come with the implementation of International Financial Reporting Standards. As the United States implements IFRS, the industry will become focused on the task of implementing these standards throughout all the nation's publicly-traded firms. For tax accountants, there are two significant implications. The first is that they will need to find ways to leverage the new standards to reduce their clients' tax burdens. This returns some of the emphasis on tax minimization to the role of the tax accountant that had been lost in the wake of SOX. The second is that international standards differ significantly from GAAP, particularly with respect to tax accounting. The degree to which international standards supersede GAAP in the negotiations will dictate how challenging this will be for the industry. While the U.S. is fighting for retention of Fin. 48, it is expected that FAS No. 109 will be completed replaced by the international standard.

IFRS promises to herald a new wave of evolution in the industry. The increased complexity it will bring to the job should create new specialization within the field. In both last decade and this next one, legislation is going to be the key driver of change in the industry. SOX turned tax accountancy on its ear; IFRS promises to do the same.

Figure 1.

Total S&P Audit Fees

$ (million)

2001

2002

2003

2004

Arthur Andersen

0

0

0

Deloitte & Touche

Ernst & Young

KPMG

PWC

Other

10.2

66.5

65.7

Total

1990.5

Data compiled by Ciesielski, J. & Weirich, T. (2006)

Figure 2.

source: Ciesielski, J. & Weirich, T. (2006)

Works Cited:

AICPA. (2009). Summary of the provisions of the Sarbanes-Oxley Act of 2002. AICPA. Retrieved April 19, 2010 from http://thecaq.aicpa.org/Resources/Sarbanes+Oxley/Summary+of+the+Provisions+of+the+Sarbanes-Oxley+Act+of+2002.htm

Ciesielski, J. & Weirich, T. (2006). Ups and downs of audit fees since the Sarbanes-Oxley Act. The CPA Journal. Retrieved April 19, 2010 from http://www.nysscpa.org/cpajournal/2006/1006/essentials/p28.htm

Durst, M. (2003). "Audit" versus "non-audit" tax services under Sarbanes-Oxley. Tax Executive. Retrieved April 19, 2010 from http://www.allbusiness.com/accounting-reporting/auditing/749044-1.html

Gill, L. (2007). IFRS: Coming to America. Journal of Accountancy. Retrieved April 19, 2010 from http://www.journalofaccountancy.com/Issues/2007/Jun/IfrsComingToAmerica.htm

PriceWaterhouseCoopers. (2010). IFRS and the U.S. Price Waterhouse Coopers. Retrieved April 19, 2010 from http://www.pwc.com/ca/en/ifrs/united-states.jhtml

Rostain, T. (2006). Sheltering lawyers: The organized tax bar and the tax shelter industry. Yale Journal on Regulation. Vol. 23 (77).

Whitehouse, T. (2008). FASB may adopt IFRS for tax accounting. Compliance Week. Retrieved April 19, 2010 from http://www.complianceweek.com/article/4161/fasb-may-adopt-ifrs-for-tax-accounting