IFS and GAAP Convergence
Briefly describe Walmart

The company establishment was in 1962 by Sam Walton. The company has grown through mergers and acquisitions to become the largest retail outlet in the globe. The main business of the company is corporate retail. The retailer offers a variety of products to its customers at a lower price compared to its competition. According to Fortune 500 ratings, the corporation ranks third among the largest corporations in the globe. The selling point of the company is by ensuring that the customer can find any product in the stores at a competitive price. The company sells its products at a lower price to attract and retain customer. The company helps producers to enable them produce quality products. The company assists through funding, technical advice and promise of a ready market. The producer in turn markets their goods to the company at a discount. The company also…...

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References

Bandyopadhyay, J., & McGee, P.F. (2012). A PROGRESS REPORT: IFRS-U.S. GAAP CONVERGENCE AND ITS CURRICULUM IMPACT. Advances In Competitiveness Research, 20(1/2), 78-89.

Tyson, T. (2011). The Convergence of IFRS and U.S. GAAP. CPA Journal, 81(6), 26-31.

Bohusova, H., & Nerudova, D. (2009). U.S. GAAP AND IFRS CONVERGENCE IN THE AREA OF REVENUE RECOGNITION. Economics & Management, 12-19.

Fosbre, A.B., Kraft, E.M., & Fosbre, P.B. (2009). The Globalization of Accounting Standards: IFRS vs. U.S. GAAP. Global Journal Of Business Research, 3(1), 61-71.

For example, there are many SEC registered companies, and they are not all American companies. Many of them are actually headquartered in foreign countries. In the past they had to change their accounting and financial information over to GAAP requirements, but changes are allowing companies to continue to use IFS instead. Some of the U.S. based companies are also going to be allowed to use IFS in order to help foreign investors better understand how they match up with competitors from other countries (AICPA, 2008). In the next few years, all companies (U.S. And otherwise) may be using IFS (Bradshaw, et al., 2010).
When addressing the disclosure levels to which companies have to adhere, IFS and GAAP are not so different. The differences generally come into play with the specifics of the issue, because there are certain documents in which specific information needs to be provided, and those documents can…...

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References

AICPA (2008). Convergence with International Accounting Standards.

American Institute of Certified Public Accountants. (2009). Where will the SEC take the IFRS roadmap? An AICPA Analysis of Comment Letters on the SEC's Proposal.

Ball R. (2006). International financial reporting standards (IFRS): pros and cons for investors. Accounting and Business Research

Bradshaw, M., et al. (2010). Response to the SEC's proposed rule - Roadmap for the potential use of financial statements prepared in accordance with international financial reporting standards (IFRS) by U.S. Issuers. Accounting Horizons, 24(1)

IFS 8 Operating Segments was to a certain degree a ground-breaking law since it represented the first foray of the International Accounting Standards Board into the area of requiring companies and business to disclose information through their management. The regulation requires certain categories of business, especially publicly traded companies to disclose information regarding their products and services, operating segments, and geographic areas where they operate. In addition to the information being based on internal management reports, these entities should also disclose information about their major customers. This requirement has generated several concerns and contentions that have become common characteristics of the implementation of IFS 8 Operating Segments (Crawford, Extance, Helliar & Power, 2012). This has in turn resulted in the emergence of concerns on whether the requirements of this regulation can be logically criticized as inadequate.
equirements of IFS

As previously mentioned, IFS 8 Operating Segments requires certain categories of business, particularly…...

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References:

Bush, T 2007, IFRS 8: What is it Good for? Accountancy Age, viewed 26 November 2014,

Crawford, L., Extance, H., Helliar, C. & Power, D. 2012, Operating Segments: The Usefulness of IFRS 8, The Institute of Chartered Accountants of Scotland, viewed 26 November 2014,

IFRS
Human Resource Accounting

The United States has a radically different accounting system than virtually every other the countries considered. The United States has their own system known as the general accepted accounting principles (GAAP). Other countries have used this system in the past, such as the UK and Germany, but there has been an international standard that has developed over the course of the last few years and virtually every other country in the world besides the U.S. has adopted this system. However, even the U.S. has received a lot of pressure from countries such as China, who has started the conversion but has formerly prepared their financial statements in what was known as China GAAP to avoid any trade disruptions

However, China has been working diligently to replace older systems such as the Chinese Accounting Standards (CAS) with the International Financial Reporting System (IFRS). It is estimated that China is roughly…...

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Works Cited

AICPA. (2011). International Financial Reporting Standards (IFRS). Retrieved from AICPA IFRS:  http://www.ifrs.com/pdf/IFRSUpdate_V8.pdf 

AICPA. (2012). International Financial Reporting Standards (IFRS) -- an AICPA Backgrounder. Retrieved from AICPA IFRS Resources:  http://www.ifrs.com/Backgrounder_GAAP_IFRS.html 

Bullen, M., & Eyler, K. (2009). Human resource accounting and international developments: implications for measurement of human capital . Journal of International Business and Cultural Studies, 1-16.

Khairajani, D. (2012, October 12). Changing Accounting Paradigm. Retrieved from Accountancy:  http://theglobaljournals.com/gra/file.php?val=MTcw

IFRS Pension Reporting 2009
IAS 19 is the equivalent to FAS 158, but there are differences in the two standards. (Meg, 2009) Under IAS 19 the current rates of return is used on high quality corporate bonds with maturities consistent with the duration of benefit obligations, where under FAS 158, the discount rate is used at which the obligation could be effectively settled. Under IAS 19, the rate is based on current market expectations over the life of the obligation, where under FAS 158 the rate of return on the plan assets is the expected long-term rates over the life of the obligation. The cost recognized is calculated almost the same way under both standards with the exception being under FAS 106, the temporary deviations from the plan can be added or subtracted.

IFRS methodology is very similar to U.S. GAAP with deferred recognition of actuarial gains and losses except past service…...

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Bibliography

Item 8. Fnancial Statements & Supplementary Data. (2009, Dec 31). Retrieved from The Coca Cola Company: http;//www.thecoca-colacompany.com/investors/pdfs/10-k_2009/12_Coca-Cola_Item8.pdf

Pepsi Co 2009 Annual Report. (2009, Dec 31). Retrieved from Pepsi Co:  http://www.pepsico.com/Download/PEPSICO_AR.pdf 

Epstein, B.J. (n.d.). IFRS vs. GAAP. Retrieved from Dr. Barry J. Epstein, CPA:  http://www.ifrsaccounting.com/ifrs-pensions.html 

Meg, G. (2009, May 1). U.S. GAAP Vs. IFRS: Pension Expenses. Retrieved from Yahoo Voices:  http://voices.yahoo.com/us-gaap-vs.-ifrs-pension-expenses-3192808.html?cat=3

For instance, a parent company that has a low level of ownership in a subsidiary may want to lower the price paid to that subsidiary to increase parent company profits. Or, if the subsidiary has a lower dividend payout, the parent may wish to pay a high price to that subsidiary to avoid larger dividend payouts at home. Further, high import tariffs at the parent's country may lead to lower prices at the exporting subsidiary in another country. Likewise, high export tariffs in the subsidiary's country may lead to lower prices as well.
True, IFRS does not recognize does not directly recognize intra-group sales as direct profit generating transactions. However, indirect advantages of recognizing profits in specific countries come into play to impact profits.

ibliography

Fowler, D.J. (1978). Transfer prices and profit maximization in multinational enterprise operations. Journal of International usiness Studies (1978) 9, 9 -- 26.

Singh, K. (2007, May 28). The…...

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Bibliography

Fowler, D.J. (1978). Transfer prices and profit maximization in multinational enterprise operations. Journal of International Business Studies (1978) 9, 9 -- 26.

Singh, K. (2007, May 28). The growing abuse of transfer pricing by TNCs.  http://www.countercurrents.org/kavaljitsingh280507.htm 

Taxes & multinational corporate strategy.  https://www.msu.edu/~butler/Ed4%2016.ppt

Herz (2013) notes that the end of convergence will essentially bring about an era where IFS is, for the most part, the de facto standard around the world. However, the process has also compelled the IASB to be more responsive to its constituents.

For Australians, involvement in ASAF signals the beginning of the final stages of convergence, where the remaining non-IFS major economies are brought into the process. Many countries with GAAP has similar principles to each other, since their systems were influenced heavily one another. The AASB (2009) notes that Australia has been in line with the EU timetable for IFS adoption. In this respect, Australia should be ahead of the United States. PWC (2013) notes that this is the case, at least for publicly-traded entities. Not-for-profits do not yet have to meet the provisions of IFS reporting, and the same is true for public sector entities. Foreign companies listing…...

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References

AASB. (2009). IFRS adoption in Australia. Australian Accounting Standards Board. Retrieved April 5, 2014 from  http://www.aasb.gov.au/admin/file/content102/c3/IFRS_adoption_in_Australia_Sept_2009.pdf 

FASB. (2014). International convergence of accounting standards -- overview. Financial Accounting Standards Board. Retrieved April 5, 2014 from  http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156245663 

Hail, L, Leuz, C. & Wysocki, P. (2010). Global accounting convergence and the potential adoption of IFRS by the U.S.: Conceptual underpinnings and economic analysis. Accounting Horizons. Vol. 24 (3) 355-394.

Herz, R. (2013). End of convergence brings challenges and opportunities. Compliance Week. Retrieved April 5, 2014 from  http://www.complianceweek.com/end-of-convergence-brings-challenges-and-opportunities/article/307946/

However, financial reporting as a system has its limits. It cannot stabilize the world economy, save the environment and help investors understand the financial condition of a company all at once. On a theoretical level, the people guiding the development and improvement of IFRS need to take this reality into consideration.
Transparency is most certainly a role of IFRS, arguably the most important one. The more difficult IFRS makes fraud, for example, the better it is. Stability, however, is not a critical role of IFRS. International financial reporting standards can and do have a direct impact on the transparency of financial statements; they have only a minor and tangential impact on the state of the global economy. hile the value they provide in terms of improving liquidity is appreciated, global economic stability is determined by a wide range of other factors, most of which have little to do with financial…...

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Works Cited:

Barth, Mary, Landsman, Wayne and Lang, Mark. International Accounting Standards and Accounting Quality. Journal of Accounting Research

Volume 46, Issue 3, pages 467-498, June 2008

 http://onlinelibrary.wiley.com/doi/10.1111/j.1475-679X.2008.00287.x/full 

Bruce, R. (2011). Clarity and thought in Brussels. Deloitte.   accessed 28 August 2011http://www.iasplus.com/bruce/column110211.htm ,

IFRS Transition
The SEC Proposal for Transition to IFRS

This essay examines the SEC's proposed ork Plan for transitioning IFRS into the U.S. Financial Reporting System. This paper presents arguments in favor of convergence because of the benefits it presents.

History of Convergence Efforts

The history of convergence efforts for IFRS reporting includes several milestones. In October 2002, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) issued a memorandum of understanding (MOU) known as the Norwalk Agreement. This agreement marked an important step toward formalizing their commitment to converging U.S. And international accounting standards (FASB, 2002).

The agreement describes the efforts of both boards to propose changes to U.S. And international accounting standards that reflect common solutions to "certain specifically identified differences" (FASB, 2002, para. 2). By eliminating these differences, the Boards expect to improve comparability of financial statements across national jurisdictions. FASB Chairman Robert Herz described the FASB's commitment to…...

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Works Cited

FASB. (2002). FASB and IASB agree to work together toward convergence of global accounting standards. Retrieved October 15, 2011 from:  http://www.fasb.org/news/nr102902.shtml 

FASB. (2006). A Roadmap for Convergence between IFRSs and U.S. GAAP-2006-2008. Retrieved October 15, 2011 from:  http://www.fasb.org/cs/ContentServer?c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176156245558 

FASB. (2011). IASB and FASB report substantial progress towards completion of convergence program. Retrieved October 15, 2011 from:  http://www.fasb.org/cs/ContentServer?c=FASBContent_C&pagename=FASB/FASBContent_C/NewsPage&cid=1176158460171 

IFRS. (2011). What are the advantages of converting to IFRS? AICPA IFRS Resources. Retrieved October 15, 2011 from:  http://www.ifrs.com/updates/aicpa/ifrs_faq.html#q5

The impact of these changes will be far-reaching. Those engaged in the financial sector will feel that greatest impact. However, the impact of these changes will be felt by everyone, including the American public. They will feel the changes by greater transparency and the ability to compare financial statements with greater equitability. It is expected that the IFS will increase public trust in the financial statements of companies.
Much of the literature that is currently available on the IFS conversion is limited to publications to help companies understand and implement the changes. At the present time, the results and affects of the conversion have not been addressed by the academic world. The changes are currently in process and the results of them are yet to be seen. Therefore, this is an area of research that will have to be addressed in the future. At the present time, any opinions regarding…...

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References

Beuren, I., Hein, N. & Klann, R. (2008). Impact of the IFRS and U.S.-GAAP on economic-financial indicators. Managerial Auditing Journal. 23(7): 632 -- 649.

Colson, R. (2005). General Purpose Financial Statements. The CPA Journal. April 1, 2005. Retrieved October 22, 2010 from  http://www.highbeam.com/doc/1P3-822127131.html 

Epstein, B. (2009). The Economic Effects of IFRS Adoption. The CPA Journal. March 2009. Retrieved 5 October 2010 from http://www.ifrsaccountant.com/media/NYSSCPA_IFRS_Economic_Effects_Epstein_0309.pdf

Epstein, B. & Jermakowicz, E. (2008). Global Financial Reporting Growing Prominence of IFRS: Implications for Transactional Attorneys. Business Law International. 9 (1): 1-93.

IFR No.39 hedge accounting requirements, accounting for investments in derivative financial instruments, criteria for hedge accounting recognition, and deferral of recognition of periodic unrealized fair value changes.
IFR No.39 hedge accounting requirements

IFR 39 permits hedge accounting under certain circumstances as long as the hedging relationship is:

Thoroughly and fully spelled out and defined as well as the circumstances in which it will be used, the objective, the nature of the risk, and how the entity will assess the hedging instrument's effectiveness

It is regularly assessed and determined to be effective

It is determined to be effective in achieving changes in fair value or cash flows attributable to the hedged risk as is written, and that this effectiveness can be reliably measured (Deloitte IA 39)

Accounting for investments in derivative financial instruments,

If an embedded derivative is separated, the host contract is accounted for under the appropriate standard. If the entity is however unable to measure…...

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Sources

Deloitte IAS 39 -- Financial Instruments: Recognition and Measurement  http://www.iasplus.com/en/standards/standard38 

Jorion, Philippe (2009). Financial Risk Manager Handbook (5 ed.). John Wiley and Sons.

(2007) discover that foreign possession rises in corporations that willingly adopt International Accounting Values.
Lastly, to support the article regarding Should U.S. Adopt IFRS? Khorana (2010) uses a study that involved utilizing 44 nations from the similar U.S. investment information that has been set as the one used in Khuran's study, Gordon and Shima (2010) display that U.S. stockholders deal more of their impartiality reserves in nations after adoption of IFRS and that the asset increase is related with the nation's lawful morals and implementation administration. Likewise, Amiram (2009) combines all speculation data, not just recognized and large custodial properties, from the International Financial Fund for 53 stockholder and 81 investee nations. He discovers augmented foreign equity assets about mandatory IFRS adoption and that the growth is superior for nations that do have corruption that is not as high and improved depositor shield.

In conclusion, in this paper, I think that…...

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Works Cited

Anderson a & Nkansah, O. (2011). Should U.S. Adopt IFRS? Financial Executive, 27(7), 24-28.

Khurana, I. & . (2010). Mandatory IFRS Adoption and the U.S. Home Bias. Accounting Horizons, 25(4), 729-753.

Sun, J.C. (2010). How Would the Mandatory Adoption of IFRS Affect the Earnungs Quality of U.S. Firms in the U.S. Accounting, 25(4), 837-860.

Segmental Information
In general, IFS 8 Operating Segments place a requirement on specific classes of entities (particularly those entities that have publicly traded securities) to disclose information concerning their respective operating segments, products and services, the geographical areas in which they compete as well as their major customers (IFS 8 Operating Segments, 2014). The information that is provided by corporations pursuant to these requirements is based on internal management reports concerning the measurement of disclosed segment information as well as the identification of operating segments (IFS 8 Operating Segments, 2014). Although its proponents argue that the IFS 8 Operating Segments are adequate for their intended purposes, critics counter that they are inadequate for certain applications. To determine the facts, this paper reviews the relevant literature to provide a timely discussion concerning whether the requirements of IFS 8 Operating Segments can reasonably be criticised as being inadequate followed by a summary of…...

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References

Buthe, T & Mattli, W (2011). The New Global Rulers: The Privatization of Regulation in the World Economy. Princeton, NJ: Princeton University Press.

Epstein, BJ & Jermakowicz, EK (2009, April). "IFRS Converges to U.S. GAAP on Segment

Reporting." Journal of Accountancy, Vol. 207, No. 4, pp. 50-55.

"IFRS 8 Operating Segments" (2014). Deloitte Global Services Limited. [online] available:

Some mergers and acquisitions (M&as) did not generate any goodwill because they were accounted for using the pooling-of-interests method. In 1969, Leonard M. Savoie (then Executive Vice President of the AICPA) stated that he expected the then-prevailing accounting pronouncement authority, the Accounting Principles Board (APB), to abolish the pooling of interests method. However, the death-knell for this accounting method was not sounded until 2001 with the issuance of SEAS No. 141. Thereafter, whenever the purchase price of an acquisition exceeds the fair market value of the acquired company's net assets, the assignment of cost to goodwill is mandatory. (26)
According to Hake (2004), although the presence of goodwill on a balance sheet represents an expectation of higher profit, there is a cost associated with its accumulation: "Because goodwill is currently treated as a nonregenerating asset, accounting practice requires that it be removed from the balance sheet as it depreciates. The…...

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Works Cited

Black's Law Dictionary. St. Paul, MN: West Publishing Co., 1990.

Brown, W.D., Tucker, K.J., and Pfeiffer, R.J. (1999). "A prospective look at the usefulness of separately reporting goodwill charges: An evaluation of 'cash earnings.'" Working paper, University of Massachusetts, December 1999.

Butler, Brian, David Butler and Alan Isaacs. A Dictionary of Finance and Banking. Oxford: Oxford University Press, 1997.

Clinch, G. (1995). "Capital markets research and the goodwill debate," Australian Accounting Review, June: 22-30, reprinted (1996) in Zeff, St. And Dharan, B. (eds.), Readings and Notes on Financial Accounting (New York: McGraw Hill), 340-50.

Investors will have to adjust and discount IFRS figures, one additional dollar of IFRS profit indicates slightly lesser incremental economic health and, if the underlying assumptions of accounting are accepted, slightly lesser ability to pay down debt and pay dividends in the future than one dollar of income calculated under GAAP.
Reaction

Capital markets are becoming more global and demand for a single set of high-quality global accounting standards is increasing. IFRS if consistently applied by issuers and their auditors will be understood by investors throughout the world. The transition to IFRS will require, at the very least, a change in mindset. Because IFRS is principle driven instead of rules driven I believe there will be a tremendous scrabble for clarification regarding accounting procedures in the U.S. because the highly litigious nature of our nation. Furthermore the end of LIFO may impact investment in certain companies. Nonetheless IFRS will benefit investors…...