Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from essay:
In other words, with respect to the dilemma between IFRS and U.S. GAAP, the view provided by the article is that recent changes have actually manifested a far more intensive process of oversight in the latter than is proposed by the former.
To the point, Ramanna & Cheng report that "despite the attempts at convergence, as of 2005, significant differences between U.S. GAAP and IFRS remained. The differences were due in large part to the attendant capital market institutions in the U.S. that had shaped the nature of U.S. GAAP over the course of the 20th century. For example, a strong tradition of civil litigation and criminal liability had given rise to an extensive body of GAAP interpretations in the U.S." (Ramanna & Cheng, 6) This highlights an issue of primary importance not just where Canada is concerned but also where the credibility of an International Accounting Standards Board is concerned altogether. Certainly, the incapacity to this juncture of a nation with the influence and geo-economic impact of the United States to make IFRS work is damaging to its prospects in nations so closely tied to the U.S. As Canada.
The resistance cited here in the periods preceding the issuance of the IFRS remains today a prominent challenge. Private entities, public officials and accountancy professionals who differ from proponents of an international reporting standard offer a host of pertinent arguments against the mandate of uniform standards, or at least in some cases, against the standards as they are presented in the IFRS. Namely, among the objections which have been routinely raised since the inception of IFRS, "individual companies have cited conversion costs; there have been disagreements over individual standards; the timeframe was imposed by 'Europe'; the companies concerned were not consulted; the future direction of standard setting has become the subject of increasingly voluble concerns." (Dilks, 1)
Still, perhaps the greatest overarching challenge in the implementation of IFRS is captured in the philosophical discourse relating thereto. The parallels to the process of globalization which have been addressed throughout this account render the same fundamental barriers for the IASB in its desire for outright standardization. An article by Ball (2006) makes the argument, in fact, that it remains unclear today and will remain unclear for some time to come whether there are truly benefits to imposing a universal accounting language. Essentially, Ball expresses concern "that there inevitably will be substantial differences among countries in implementation of IFRS, which now risk being concealed by a veneer of uniformity." (Ball, 1) This is a concern which permeates all discourse concerning the seeming inevitability of internationalization and its intended universality of reporting policy conditions.
It also contributes to a resolution on the discussion concerning Canada and the particular dilemma facing the consultant in question. Namely, the argument that IFRS may well prove too costly and lacking in its declaimed benefits seems equally as compelling as the argument that the United States is a likelier point of reference for establishing interceding interests than is the whole of the global community. Both arguments contribute to the same conclusion that much like its assumptive basis in globalization, the process of accounting universalization is a questionable ambition to which arguments in favor of regionalism seem a rational response.
Certainly, this is the conclusion upon which the article by Ramanna & Cheng arrives, with the consultant at the center of the discussion ultimately appealing to the logic that "Canadian markets are, if you are being charitable, about 3% of the global market place. It has become increasingly difficult to make foreign investors comfortable, in the sense of understanding, the Canadian accounting system that we have in place. It is very expensive to educate others. The choices are simple: it's either U.S. GAAP or international standards." (Ramanna & Cheng, 6)
In that dilemma, the article and our own account determine, the convergence to U.S. GAAP standards is already underway, inherently more desirable and categorically more realistic as it relates to the practices which have long governed Canada's accounting and financial reporting standards.
Ball, R. (2006). International Financial Reporting Standards (IFRS): Pros and Cons for Investors. Social Science Research Network. Online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=929561
Dilks, I. (2005). IFRS Update December 2005 -- Global. Accountancy Age. Online at http://www.accountancyage.com/accountancyage/features/2147292/ifrs-update-december-global
Ramanna, K. & Cheng, B. (2009). Choosing a GAAP for Canada. Harvard Business
"Canada IFRS Canada's Dilemma IFRS" (2010, June 15) Retrieved November 30, 2016, from http://www.paperdue.com/essay/canada-ifrs-dilemma-10307
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"Canada IFRS Canada's Dilemma IFRS", 15 June 2010, Accessed.30 November. 2016, http://www.paperdue.com/essay/canada-ifrs-dilemma-10307
This process has been ongoing since then. 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