Global standardization of accounting requires the United States to adopt IFRS. Do you think it is likely that the United States will embrace IFRS in the near term, and what do you think are the some of the factors that might discourage the country from adopting IFRS? Well, I think United States will not embrace IFRS in the near future as United States are now reliance on the accounting standards issue by the FASB rather than on the standards issued by the IASB.
Unlike many countries, United States has not yet adopts the IFRS. Besides, the United States was very strong in its resolve not to adopt IFRS, believing that its ‘rule-based’ standards were superior to the more ‘principle-based’ standards of the IASB. Nevertheless, due to some corporate collapse such as Enron, FASB and IASB had entered a joint agreement to converge and improve the standards of both the IASB and FASB.
Although there appears to be a long-term aim that ultimately there will be one set of standards used internationally, including within the United States , the timing of when the United States will adopt IFRS is far from certain as the process will take time and need substantial investment in staff and training but it is expected that the country will eventually adopt IFRS.
Factors that would be discouraging the country from adopting IFRS would be interrelated and they are mostly due to the differences in culture, taxation, level of education, level of economic development, religion, age and size of accountancy professions and also influences of theory as well as different languages. Besides, they also face issue such as the cost of implementing. Furthermore, all this process does take up lots of time and resources especially for small business. Lastly, powerful countries such as US are less likely to surrender standard settings authority to the IASB.