On April 2010, FASB and IASB issued a report on the progress of the merging of IFRS. The decision whether to completely merge the two will be announced by SEC in 2011. SEC will then allow a period of four years for full transition into IFRS. In the event that SEC agrees to incorporate IFRS into the reporting system, then the possible timeline will be as below.
2011, SEC decision on IFRS
2012-2014- Likely adoption period
2013-2015- collection of comparative information
2015- Start of adoption period.
2015- 2018- complete adoption period.
Companies in the US stand to benefit from converting to IFRS. First, the multinational companies will save costs by using a single accounting system over all countries. The companies will also strengthen their position in negotiating for credit with financial institutions due to reduced borrowing costs since IFRS have very affirmative impact on credit rating. It will also make it easy to acquire foreign companies and implement the acquisitions. Despite the benefits, some people feel that IFRS have disadvantages, one being uncertainty in evaluating financial standards, as managers can use personal judgement to chose what to report. This will also make it hard to compare statements. Lastly, there is no enforcement to watch over the applications of the standards.
There have been differences in merging the GAAP and IFRS. This is because; most professionals and companies in the United States feel that the GAAP are better the IFRS. They feel that the GAAP have been in use for the past 30 years, and for this reason, they have been put through criticism and scrutiny over time. IFRS, on the other hand, is barely a decade old and its implementation depends on particular countries using them.
Ford makes use of GAAP in its reporting system. It recognises its assets at the historical values, instead of the fair value. BMW, on the other hand, makes use of IFRS. They report their assets based on the fair values that the vehicles could fetch in the market.