Going global brings big changes to U.S. accounting profession

In today’s global society, businesses of every size and shape find the opportunity to compete in international markets. One result of this globalization of business is a growing push for a single set of international financial reporting standards (IFRS).

For years, businesses and CPAs have complained that U.S. standards are unnecessarily complex and often punish smaller businesses, and the international community sees the same problems with simply embracing current U.S. accounting standards. The result is a move for a new set of international standards that relies much more on the application of broad principles and the exercise of professional judgment by CPAs than the rules-based approach that CPAs in the U.S. currently have.

More than 100 countries have already adopted IFRS, but the U.S. remains reluctant because the potential changes could have an even broader impact than the changes brought by Sarbanes-Oxley (SOX).

As with SOX, companies could face expensive training and compliance costs, and CPAs would be tasked with learning and applying new standards. Small businesses will not be immune. Such sweeping changes could eventually influence every aspect of the financial community, from tax to financial planning.

“Sooner or later the changes will affect how we report to tax authorities as well,” said Gary Sandefur, CPA, with RG Barry Corp. in Columbus. “Those who ignore the changes may soon find themselves incapable of even basic compliance.”

However, the transition to IFRS could also have a positive impact on CPAs.

IFRS’ more principles-based standards allow CPAs to do what they do best: analyze situations and apply standards that are appropriate and logical for the situation, thereby demonstrating their value as business advisers.

The move towards IFRS is shaping up to be the hot topic of 2008 and beyond as the pros and cons of the transition continue to be debated.

For more information and continuing coverage of the latest developments visit The Ohio Society of CPAs Web site.