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Continuing Differences Between US Essay U. S. GAAP IFRS Convergence In January 2008, the U. S. SEC issued a final rule that adopted rules that allowed non U. S. -based issuers financial statements in accordance with the IRRS, as issued by IASB, without the need to reconcile with the U. S. GAAP (SEC, pp. 20, 2008). In its ruling, the SEC acknowledged that the convergence efforts between the IFRS and U. S. GAAP have made progress in eliminating many disparities. The SEC acknowledged that its prior complaints on lack of information or disclosure by foreign issuers on certain areas, and the manner of presentation of their financial statements have been resolved by the convergence efforts. The SEC, however, recognize that a number of difference still exist, with some accounting subjects that the IFRS has yet to fully address ( SEC, pp. 20, 1998). Continuing Differences Between US GAAP and IFRS According to the SEC, due to their sources, U. S. GAAP and IFRS will continue to have differences regardless of their convergence. The SEC said that these include (i) the effects of mergers, combinations and other legacy transactions that happened when the convergence was still initiated, and (ii) those arising as a result of accounting elections (for example, hedge accounting) that foreign issuers make under those standards (SEC, pp. 21, 2008). The International Accounting Standards Board in its 2005 report said that certain divergence issues has to be addressed in the long-term. These include (i) classification of debts on refinancing or default under credit agreements, (ii) differences in financial instruments accounting, (iii) post-employment benefits, and (iv) long-lived assets impairment and borrowing costs capitalization. AIFRS/Australian GAAP PricewaterhouseCoopers reviewed the the Australian equivalents to International Financial Reporting Standards (AIFRS) and gave recommendations to the Australian Accounting Standards Board. PwC pointed to divergences between Australian Standards (AIFRS) and IFRS: According to PWC, the implementation of AIRFS is expect to improve corporate governance and financial reporting in Australia. Ernst Young Report Ernst Young said the IRS differ significantly from those principles in use. Among other things, the IRS protocol on business combinations compel recognition of more intangible assets to be valued an recognized than practiced in local accounting rules. EY said that the IFRS will help companies improve their internal control as it requires more extensive reporting procedures, and will require greater transparency among firms as a common financial standard will be used. EY said in its report that the conversion to IFRS has a substantial impact on financial reporting which requires management and personnel to focus on improving strategy because: * financial statements presentation has been modified * measurement of assets and debts may result in increase in earnings and volatility in equity. * additional disclosures would be required. REFERENCES Final Rule: Acceptance From Foreign Private Issuers of Financial. January 9, 2008. Securities and Exchange Commission. http://www. sec. gov/rules/final/2007/33-8879. pdf International Convergence status. 15 June 2008. International Accounting Standards Board. http://72. 3. 243. 42/fasac/06-21-05_intl. pdf Padoa-Scioppa. 19 May 2006. Financial Times. retrieved 13 Aug. 2008. http://www. iasb. org/News/Announcements+and+Speeches/Work+on+converging+accounting+standards+must+go+on. htm PriceWaterhouseCoopers. 28 Jan. 2005. Submission to Parliamentary Joint Committee on Corporations and Financial Services. http://www. aph. gov. au/SENATE/committee/corporations_ctte/completed_inquiries/2004-07/aas/submissions/sub22. pdf