Changing the Rules
Regulations for Switching from GAAP to IFRS
Rules are meant to be broken! Surprisingly, this should be the case for accounting standards in the United States. The discussion at hand is “Should the SEC move to a less regulated financial accounting and reporting system, the International Financial Reporting Standards (IFRS)?” For a few years now the SEC have been talking about switching its traditional Generally Accepted Accounting Principles (GAAP), to the worldwide used IFRS. There are numerous strengths in switching to the IFRS system of accounting in America, but there are also minor weaknesses. To better understand how these strengths benefit America and outweigh the slight weakness, it is important to comprehend the GAAP’s influence. Only then can it be said that deregulation in accounting systems is truly needed.
In 1973 the Financial Accounting Standards Board (FASB) was created to establish standards of financial accounting and reporting. It came up with the Generally Accepted Accounting Principles, also known as GAAP, which is used today in the United States. The GAAP is the set of accounting rules and principles that are used to prepare, present, and report the financial documents published by every public company and corporation. The Securities and Exchange Commission, or SEC, is the group responsible for setting forth the rules and regulations as well as over seeing companies accounting procedures in accordance with the GAAP.
The SEC has recently announced that all companies traded on United States stock exchanges would have to switch from the Generally Accepted Accounting Principles to a different set of standards by the year 2014. This new set of standards, als ...