U.S. GAAP vs. IFRS: What Lies Ahead for the United States?
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With the global use of International Financial Reporting Standards (IFRS), the United States is facing the dilemma of whether to convert to these standards or converge them with U.S. Generally Accepted Accounting Principle (GAAP) in an effort to remove the major differences between standards. One set of global financial reporting standards would improve the comparability of financial statements around the world, but the Securities & Exchange Commission believes the standards need further improvement, before the U.S. takes any major steps to convert. I conducted research, focusing on professional journals, publications from the Big Four accounting firms, and standards issued by the IASB and the FASB. I examined the differences between U.S. GAAP and IFRS, looking specifically at the accounting treatment for leases, and the impact a major change in reporting standards would have on public companies, accounting firms, and the education system. After conducting thorough research, I determined that The U.S. needs to continue the convergence effort to ensure that in the future, U.S. financial reporting standards will be of high-quality. While one set of global financial reporting standards is beneficial, it is not something that can't be rushed into. The U.S. needs to take the time to properly prepare, not just public companies and the education system, but the standards as well.