What Will The International Financial Reporting Standards (IFRS) Mean to Businesses and Investors?

On August 27, 2008, the Securities and Exchange Commission (SEC) announced a roadmap for a complete change in U.S. accounting standards. If the roadmap is adopted, U.S. companies will have to change from the country’s existing accounting rulebook to International Financial Reporting Standards (IFRS) in 2014. Under the SEC plan, some very large firms (most likely multinationals) may adopt the new standards as early as 2009. While in recent weeks market turmoil has grabbed headlines, the underlying change in accounting rules could have a deeper and longer lasting impact. If the change goes well, it could usher in easier access to capital for U.S. and foreign firms, lower the costs for U.S. firms operating overseas, and simplify accounting for companies worldwide.

Critics of the switch point to weaknesses in the international standards; for example, they do not provide detailed enough guidance to companies, they may allow managers more potential to manipulate earnings, and they may increase costs and create confusion for businesses. This article examines whether the changeover is likely to happen, and if so, what it will mean to U.S. and foreign firms.







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What are the new standards and how have they evolved?

International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Committee (IASC) and its successor organization, the International Accounting Standards Board (IASB). Because of the standards’ identification with these bodies, IFRS is sometimes referred to as IAS GAAP. A note about terminology: Generally Accepted Accounting Principles (GAAP), either U.S. or IAS, are a set of documents that specify the accounting principles and guidelines that companies use to prepare their financial statements, which are the main way companies communicate with their investors and other stakeholders. GAAP documents give guidance on what component statements should be shown within the published financial statements, how the figures in the financial statements should be calculated, and what notes and additional details should be included.

Although it seems like a major step to replace one set of accounting principles with another, it should be noted that any GAAP is a constantly evolving set of principles. Over the last 10 years, U.S. GAAP has seen complete rewrites in the accounting for mergers and acquisitions and in the accounting for derivatives and hedges, as well as major changes in 28 other areas.

Will the Roadmap Happen?

The SEC has been fairly aggressive in pursuing a convergence agenda thus far. Since November 2007, the SEC has allowed foreign firms to report under IFRS only, without requiring any U.S. GAAP adjustments, a move estimated to have saved affected firms as much as 2.5 billion Euros over time.[1] To be fair, requiring foreign firms to supply less data is never going to foment much opposition. The next stage actively compelling U.S. firms to change their reporting method will be more difficult to achieve.

For investors, the new standards will require an adjustment in how they interpret earnings numbers. For government, it will require ceding some regulatory power to an international body. The gain will be improved access to international capital; however, this is no benefit to the many smaller firms uninterested in international capital, which, in any case, is a difficult benefit to quantify. Adopting IFRS will also require businesses to conduct a one-off reworking of accounting records (at an administrative cost), and it may increase corporate tax payments, due to the “last in, first out” (LIFO) conformity rule, which will be discussed below. Companies with multinational operations will benefit by saving on the ongoing costs of annually converting their foreign reports to U.S. GAAP, but purely domestic companies will have no such countervailing benefit.

With many participants in the process quite committed, change looks more likely than not. But the political process, including the forthcoming general election, may delay or even halt the transition. The SEC’s roadmap includes one obvious “get out” clause: the commission will decide in 2011 whether convergence is “in the public interest and would benefit investors.”[2]

How Will IFRS Differ from U.S. GAAP?

Principles over Rules

IFRS is characterized as more “principles based” than U.S. GAAP, which is seen as largely “rule based.” However, it should be noted that any GAAP is, by definition, a set of principles. U.S. GAAP gives substantial discretion to managers in determining the assumptions behind their accounting statements, even on such basic items as depreciation timescale and inventory costing methods, decisions that can influence annual income by hundreds of millions of dollars for large firms.

The age of U.S. GAAP (resulting in a larger body of policy than that of the younger international accounting standards organizations) and the voracious appetite of U.S. accounting practitioners for official guidance and clarifications of standards (principally as an insulation against liability in the highly litigious United States) are responsible for much of the rule-based characteristics of U.S. GAAP. If IFRS is adopted in America, the demand for guidance will likely not abate. As companies seek guidance on specific situations, standard-setters may feel pressured to expand the IFRS rulebook, thus eroding its principles-based nature. It may also create additional demand for accountants and accounting experts.

Similarities and Differences

Although there is much discretion in U.S. GAAP and IFRS, there are some marked distinctions that will force different treatments on U.S. companies, or make new methods available to U.S. firms. Some of these changes are discussed below note that this is intended to be a representative sample of differences rather than an exhaustive list of the differences between the two sets of standards. Citigroup reports there are as many as 426 total differences,[3] but in many areas there is little divergence. For example, the issue of the marking to market of financial assets (especially hard to value assets such as mortgage backed securities) is one area that has attracted attention in the current credit crisis, but the IFRS standard (IAS 39) is similar to the U.S. GAAP standard (contained in FAS 157, FAS 133, and others). (Incidentally, both standards are being relaxed or “reinterpreted” see Clarifications on Fair Value Accounting and EU Relents on Some Mark-to-Market Accounting.)

Inventory Valuation Conventions

The most frequently discussed difference between IFRS and U.S. GAAP is in the treatment of inventory costing. U.S. GAAP allows the LIFO assumption, which expenses the most recently purchased inventory (last in) as a cost of goods sold expense first (first out), to be used for inventory costing. As prices tend to rise in most industries, this practice results in a high cost of goods sold expense, thereby depressing profits. Nonetheless, most U.S. companies use the LIFO method because it conveys tax advantages, and due to a unique “conformity rule” if the company uses LIFO in tax accounting, it must also use the harsh method in financial accounting. Under IFRS, LIFO is not allowed at all. Unless the SEC seeks an exception for U.S. firms something which the U.S. Financial Accounting Standards Board has advised against or unless the U.S. Internal Revenue Service scraps the conformity rule, U.S. companies will be forced to discontinue LIFO. While the result will be increased net income, it will ultimately be a disadvantage to stockholders because companies will be charged more corporate taxes. This tax penalty could be in the hundreds of millions of dollars for some large industrial firms and is seen as a major impediment to IFRS adoption.

Discretion in the Valuation of Assets

IFRS gives management more discretion in the area of asset valuation as a whole discretion that is also likely to increase company income. In the area of research and development costs and the related area of homegrown intangible assets valuation, IFRS is more generous than U.S. GAAP. IFRS allows development costs, but not basic research costs, to be included in the company’s assets and, therefore, not expensed against income. U.S. GAAP insists that all research and development costs are expensed, except in extremely limited industry-specific circumstances.

Additionally, under U.S. GAAP, writing assets down due to “impairment” (i.e., permanent decreases in value), is a one-way process. Once written down, there is no way that an asset can be written back up, even if economic or industry circumstances improve. IFRS, on the other hand, does allow write-ups, and allows them to benefit income. Moreover, under U.S. GAAP, an acquired asset can never be increased in value as a result of market appreciation. In contrast, based on a long-lived but rarely used UK GAAP convention, IFRS allows assets to be written up in line with market values, as long as the revaluation is carried out with regular frequency. However, the increase in book value does not represent an increase in net income. With IFRS, there is also flexibility in many areas of standard setting, whereby more than one accounting treatment is allowed, although usually, only one treatment is described as the preferred or “benchmark” treatment.

Effect on Income

In many areas, IFRS is less conservative than U.S. GAAP, meaning that it allows an increase in the risk of overstating income in a company’s financial statements. IFRS also allows more flexibility than U.S. GAAP, and since bonus and stock option schemes usually give managers incentives to increase income, this flexibility likely will be used to increase income more often than it will be used to decrease income. It is important to note that income is always an estimate, based on management judgments such as the useful life of long-term assets, the expected losses from bad debts, the expected costs of warranties, and the diminution of large assets such as the value of equipment and the value of accounting goodwill. It can be argued that the income estimate under U.S. GAAP has no more intrinsic validity than the estimate under IFRS. However, setting aside the question of intrinsic validity, it is fairly clear that switching from U.S. GAAP to IFRS will lead to many companies reporting higher income numbers, even while holding cash flows constant. European companies quoted on U.S. markets provide a natural laboratory since they were required to report in both U.S. GAAP and IFRS until very recently. Citigroup London analyzed 73 of the largest European companies quoted in the U.S. and found that 82 percent of the firms reported higher income under IFRS than under U.S. GAAP.[3] [4]







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Effects on Investors

Looking at these findings, the adoption of IFRS would seem like great news for investors. But this is not the case. Remember, these European companies were reporting two different income figures based on the same financial year, that is, based on the same economic activity and cash flows. The question of which income number is the “true” estimate of underlying profit is irrelevant to some extent. Investors used to analyzing U.S. GAAP income 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 U.S. GAAP.

Apart from magnitude, the second useful facet of income numbers is change. Earnings volatility, often minimized by earnings management techniques that are legally dubious, is an important signal to investors of a company’s underlying health. Annual income numbers should reflect the economic performance of the company in that particular year. The pre-IFRS GAAP of many European countries often allowed companies wide latitude to manage earnings and show a smooth pattern of earnings change from year to year that hid changes in company performance investors may have wanted disclosed. Although IFRS has substantially changed those practices, more latitude remains than under U.S. GAAP. This has a deleterious effect on how useful IFRS reports are to shareholders. Research shows that European companies’ IFRS reports, although more informative than pre-IFRS GAAP reports, are less informative than U.S. GAAP reports for the same firms,[5] because IFRS reports show smoother earnings, show less correlation between reported earnings and cash flow, show less timely loss recognition, and crucially, show less association between reported earnings and firms’ stock prices.

But They’ve Come Such a Long Way

Perhaps rumors of U.S. GAAP’s death have been exaggerated. But it is worth noting that 20 years ago, a unification of U.S. standards and Western Europe’s tax-based, low-information-content financial statements would not have been considered. In fact, the actions of a small coterie of accounting regulators effectively exported the “Anglo Saxon” concept of an economic-performance-based, decision-relevant, dual-books accounting system to the world. The IASB now has just under 100 member countries, but management has been tightly concentrated. Between 1973 and 2001, seven of the 12 IAS chairmen came from just three countries[6] (three from the UK, two from America, and two from Australia) and, since 2001, UK-based IASB Chairman David Tweedie has served uninterrupted. The important executive position of secretary/secretary general has been even more tightly controlled with all but one of the secretaries coming from the UK, America, or Australia.[7] Accountants from these three countries do not agree on everything, but there is enormous common ground amongst practitioners and academics on what the aims of a financial accounting system should be. That common ground may be summed up as follows:

  • A financial accounting system should aim to provide information on how well the company is doing (economic performance) and help investors in their resource allocation decisions (decision relevance).
  • If the tax authorities or governments require information for their legal or revenue-raising purposes, this should be accomplished by a separate system (dual books).

These concepts are central to IFRS, but they were not generally accepted by all countries until quite recently. The United States will grapple with substantial change if it adopts IFRS, but for many IASB member countries, including Japan, Germany, and France, the past few decades have already brought changes beyond recognition to their accounting standards, changes that bring them much closer to U.S. GAAP.

Delivering the Promise of Convergence

It would be a pity if the United States backed out of the convergence process after being intimately involved in the process over the last 30 years. For U.S. firms seeking foreign capital and U.S. firms operating overseas, convergence is a promising prospect. Many IASB member countries have undoubtedly favored convergence based on the prospect of gaining access to large U.S. capital markets a carrot that has been implicitly dangled in front of them based on U.S. involvement in the process over the years. Even in the markets’ current weakened state, convergence remains a substantial benefit to foreign firms.

However, the U.S. is likely to act based on its own self interest in this key economic decision. Also, IFRS is unlikely to be adopted in the U.S. without some solution to the LIFO problem, and an assurance of the continued primacy of the SEC in regulating U.S. securities markets.

Read more about why caution should be exercised in relying on foreign issuers’ IFRS-compliant financial statements here.


[1] Penny Sukhraj, “EU May Have to Accept US GAAP next year” Accountancy Age, November 27, 2007. (no longer accessible).

[2] U.S. Securities and Exhange Commission. “SEC Proposes Roadmap Toward Global Accounting Standards to Help Investors Compare Financial Information More Easily.” press release, August 27, 2008.

[3] David Jetuah, “Citigroup Lays Out IFRS-US GAAP gulf” Accountancy Age, August 30, 2007. (no longer accessible).

[4] Jack Ciesielski, “IFRS & GAAP: The Urge To ConvergeThe Analyst’s Accounting Observer, 17, no. 4, March 26, 2008.

[5] Mary E. Barth, Wayne R. Landsman, Mark H. Lang, and Christopher D. Williams, “Accounting Quality: International Accounting Standards and U.S. GAAP” working paper, University of North Carolina and Stanford University, 2006.

[6] IAS Plus, International Accounting Standards Committee History, http://www.iasplus.com/restruct/iaschistory.htm.

[7] Kees Camfferman and Stephen A. Zeff, Financial Reporting and Global Capital Market: A History of the International Accounting Standards Committee 19732000, (New York: Oxford University Press, 2007).

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All IFRS-Compliant Statements Are Not Equal

In November 2007, the Securities and Exchange Commission (SEC) announced that fully compliant International Financial Reporting Standards (IFRS) financial statements of foreign issuers would be recognized for listing purposes without reconciliation to U.S. Generally Accepted Accounting Principles (GAAP). In August of this year, the SEC further stated that it would publish for public comment a proposed roadmap that could lead to U.S. issuers using IFRS beginning in 2014.[1]

This article considers the global position on IFRS convergence and the caution that should be adopted in relying on foreign issuers’ financial statements. It also considers the domestic issuers’ position and the changes to standard setting that can be anticipated over the next few years.






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Although the U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have been moving toward convergence of their standards, as part of the Norwalk Agreement, the SEC’s recent statement is a significant step forward in the process. It signals that U.S. preparers and users of the financial statements of domestic and foreign companies are likely to become more involved in international accounting issues.

There have been various pressures and issues leading to the SEC decisions, and it has been argued that high-profile American corporate scandals precipitated a shift in U.S. accounting authorities’ views on the best basis for accounting regulations.[2]The result was a move towards the principles-based approach, espoused by the IASB, as opposed to the current U.S. rules-based standards. However, this raises two important questions:

  • What are the implications of recognizing foreign issuers’ IFRS statements for those in the U.S. who analyze such statements or those who have subsidiaries, branches, or associates in IFRS regimes?
  • In the future, will domestic issuers file IFRS-compliant financial statements, and if so, when, and what will be the procedure?

IFRS Adoption Varies By Country

It is important to remember that the IASB is only a standard setter and it does not have monitoring or enforcement powers. The decision to adopt IFRS either fully or modified is the responsibility of individual countries. The IASB has no part in that process, and national practices often vary with a lack of comparability in financial statements. There is an International Financial Reporting Interpretations Committee, but its role is to consider the substance of standards, which result in unacceptable or divergent practices, and not to consider the problems of individual countries and entities.

The non-involvement of the IASB has led to a complex and variable pattern in the process of establishing IFRS in individual countries. For example, the European Union adopted IFRS for all listed companies publishing consolidated accounts; however, the EU routinely endorses standards before they are adopted, and this led to amendments, limited in time and scope, to IAS 39.[3]

Recent evidence also demonstrates that the degree of IFRS compliance in EU countries is variable.[4] The EU also allows member countries the option of either permitting or requiring IFRS to be applied to non-publicly traded companies and to annual individual entity accounts, i.e., non-consolidated regardless of whether the company is trading on a regulated market in the UK. Consequently, the UK permits such companies to use IFRS; Malta and Cyprus require all companies to use IFRS; Poland and Portugal do not permit individual entities, whether traded or not, to use IFRS; and several countries either require or permit IFRS use for financial institutions, such as banks and insurance companies. This tapestry of regulations makes it difficult for U.S. companies operating in the EU.

Australia did not follow the EU’s approach; it modified some of the standards to meet its needs, while some information was still reported under the old Australian standards, due to a lack of equivalent IFRS.[5] These differences weakened the main benefit of IFRS, international comparability, and led Australia to rethink its strategy.

In 2006, the Canadian Accounting Standards Board adopted IFRS, taking the position that all publicly accountable entities will adopt IFRS for financial statements issued on or after January 1, 2011.[6] As far as private companies are concerned, Canada plans to set its own standards, which will not be linked to IFRS.

In addition to Canada, India and Korea will adopt IFRS in 2011. China is attempting to move toward IFRS with its new Chinese Accounting Standards, but it faces several challenges. China has a long tradition of financial concepts and practices that do not fit easily into the IASB approach. In addition, there are an insufficient number of accountants with the necessary knowledge, and the financial infrastructure is still very immature.[7] Nonetheless, China is continuing to make progress, and several Chinese companies listed on the New York Stock Exchange are issuing financial statements that are compliant with IFRS.

This brief review of some major developments demonstrates that caution must be exercised when using foreign companies’ financial statements. If for listing purposes the SEC has accepted those statements, the user is assured that they are fully IFRS-compliant. In other instances, it is important to examine:

  • The particular country’s policy on the extent of IFRS adoption, including considering whether certain entities’ use of IFRS is mandatory or simply permitted.
  • The status and the experience of the auditing profession in that country.

Once users are satisfied on these issues, the financial statements can be used with confidence.

IFRS and the U.S.

For several years, America has been going through a process of convergence with IFRS. In October 2002, the FASB and the IASB announced the issuance of a memorandum of understanding, the Norwalk Agreement, in which the two bodies agreed to:

  • Undertake a short-term project aimed at removing a variety of individual differences between U.S. GAAP and IFRS,
  • Remove other differences between U.S. GAAP and IFRS by working mutually and concurrently on discrete substantial projects,
  • Continue progress on current joint projects, and
  • Encourage their respective interpretative bodies to coordinate their activities.






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Rules versus Principles

While progress is being made, there are substantial issues yet to be resolved. For example, although there is considerable agreement on technical issues, wildly differing fundamental philosophies result in a major debate concerning “rules versus principles.” A principles-based system is heavily dependent on the use of concepts, which can get fuzzy around the edges because concepts are often culturally and contextually derived. As Lenihan and Hume point out: principles require contextualizing.[8] While a rule is expressed in a certain setting and does not require further explanation or interpretation, “principles can be interpreted differently in different situations, but doing so requires judgment, which can be controversial.”[9] Instructing one’s broker to “buy low and sell high” is an example of the principle approach, which places the onus of judgment on the broker to determine what is high and what is low. On the other hand, one can instruct one’s broker to sell holdings in a certain company when the market price is above $20.00 per share. That is a rule.

The phrase “accounting principles” has long caused some problems in the United States. In 1939, the Committee on Accounting Procedure of the American Institute of Accountants, in the absence of any standard-setting body, started to issue statements on accounting principles. Alarm bells sounded and the Wheat Committee weighed in with this judgment: “Accounting principles have proven to be an extraordinary elusive term. To the non-accountant (as well as to many accountants) it connotes things basic and fundamental, of a sort that can be expressed in a few words, relatively timeless in nature, and in no way dependent upon change fashions in business or in the needs of the investment community.[10] With such misgivings, it is not surprising that the term “principles” was abandoned, and with the establishment of the FASB in 1972, the phrase “accounting standards” was adopted.

This was not just a change in terminology but also, with the establishment of the FASB, a change in philosophy and a move towards more prescriptive pronouncements. Gorelik has argued that the environment confronting the FASB has been less favourable than for standard-setters in other countries.[11] In a critical environment, the FASB has had to establish a compact organizational structure and an extensive due process; therefore, the standards it has produced have been much more detailed than those in some other accounting regimes.

While the FASB has stated its willingness to move to a principles-based approach, the problem in making the switch is that one is not comparing two technical systems, but two different mindsets. This raises difficulties in explaining the detailed advantages of one approach over another. The reasons for preferring principles over rules are not always cogently argued. K. Wild, the partner responsible for International Financial Reporting for Deloitte and Touche worldwide, expressed it best: “Tax legislation, for example, is based on rules and is dead easy to get around. Principles-based standards are much harder to avoid.”[12]

Academic evidence appears to support that contention. Duchac, in an investigation of consolidation rules for special purpose entities, concluded that detailed rules have driven out professional judgment, resulting in decisions that have been consistent with the rules but inconsistent with the principle of providing the most useful financial information.[13] Mano and Mouritsen drew similar conclusions in their examination of the FASB’s attempt to measure the expense of stock options. They argued that rules “allow some to stretch the limits of what is permissible under the law, even though it may not be ethically or morally acceptable.”[14]

Although academic evidence indicates the advantages of a principles-based approach in certain settings, there is no denying that those countries adopting IFRS for the first time are confronting practical problems. In a study of Taiwan’s move from FASB standards to IASB standards by the author and Ong, one senior regulator stated that he believed that, in IASB standards, the same word appeared to have different meanings in different paragraphs.[15] In such circumstances, there is a strong temptation to turn to the precision of rule-based standards and the specific examples given in such standards.

The FASB and the IASB have been engaged in an elaborate dance to find a solution to the rules versus principles dilemma. Although leading speakers in America publicly espouse a principles-based approach, they are aware that their sentiments are not shared by all, and possibly not shared by the majority.

The shifting positions on both sides are leading to discontent among various constituents. On the U.S. side, some are arguing that the robustness of the rules approach is lost and that the process of introducing a principle-based approach is not worth the supposed benefits. Many countries, which have adopted IFRS as they are now worded, argue that no further concessions on a rules-based approach should be granted the United States, and it simply needs to make a decision on adoption.

Although such a decision is in the making, it may not occur until 2014. While that may seem to be the distant future, other countries’ experience suggests that a five-year period of preparation is required. Hence, preparations should commence in 2009, even though the final decision will not be taken until 2011. There is a danger that the IASB and those countries already using IFRS may decide that they will not wait and that the prolonged period of U.S. convergence has run a full course.

Conclusions

Increased adoption of IFRS, along with the SEC’s agreement that foreign issuers can file fully compliant IFRS statements without reconciliation, leads to two main questions in the U.S. First, what is the degree of confidence in analysing and using IFRS financial statements? Regarding fully compliant statements, there should be no problems, but the user must be aware that there are differences in approach to certain accounting transactions and events.

A risk lies in using financial statements, when it is not immediately evident that they are fully compliant. Due process must be carried out to assess the foreign country’s strategy on adoption, the particular company’s policies, and the status and the experience of the auditing profession in that country. Caution is of utmost importance.

The second question concerns the future position of domestic issuers in the U.S. Although the FASB and the IASB have been working together on the convergence process, there have been delays and difficulties. A major issue revolves around the two different mindsets regarding standard setting: rules- or principles-based standards. The FASB’s and the SEC’s public announcements suggest that a principles-based approach is acceptable, but there is unspoken recognition that this change could be too drastic.

The SEC’s recent announcement indicates that there is an apparent willingness towards conversion of U.S. GAAP with IFRS, but the intent is not unambiguous. A final decision will be made in 2011, and if IFRS are accepted, the change will take place in 2014. That is a very tight timeline, but not pursuing convergence would make the U.S. one of the few major countries in the world that is not using the international language of accounting.

Read more about what IFRS entails and what convergence could mean to U.S. businesses and investors here.


[1] U.S. Securities and Exhange Commission. “SEC Proposes Roadmap Toward Global Accounting Standards to Help Investors Compare Financial Information More Easily.” press release, August 27, 2008.

[2] Sarah B. Eaton, “Crisis and the Consolidation of International Accounting Standards: Enron, The IASB, and America” Business and Politics, 7, no. 3, (2005): 118.

[3]REGULATION (EC) No 1606/2002 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 19 July 2002 on the application of international accounting standardsOfficial Journal of the European Communities, September 11, 2002.

[4] Commission of the European Communities, REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT on the operation of Regulation (EC) No 1606/2002 of 19 July 2002, April 24, 2008.

[5] The Association of Chartered Certified Accountants, “Getting the Message: A Snapshot of Company Reporting in Australia” Part 11: Financial Reporting, October 2006.

[6] Accounting Standards Board, Canada, Strategic Planning Publicly Accountable Enterprises, www.acsbcanada.org//3/3/0/3/0/index1.shtml#strategic.

[7] Su Shuhuan and Hu Cathy, “China Part Two: Convergence, Challenges and Conversion” International Accountant, December 2006: 2829.

[8] Donald G. Lenihan and David Hume, “A Question of Standards: Accounting in the 21st Century” Centre for Collaborative Government, CGA-Canada, January 2003.

[9] Ibid.

[10] Establishing Financial Accounting Standards (New York: American Institute Of Certified Public Accountants, 1972).

[11] George Gorelik, “The Setting of Accounting Standards: Canada, the United Kingdom, and the United States” The International Journal of Accounting, 29, (1994): 95122.

[12] R. Bruce, Business Life, Financial Times, November 2, 2006.

[13] Jonathan Duchac, “The Dilemma of Bright Line Accounting Rules and Professional Judgment: Insights from Special Purpose Entity Consolidation Rules” International Journal of Disclosure and Governance, 1, no. 4 (2004): 324339.

[14] R. M. Mano and M. L. Mouritsen, “The Sensibility of Principles-Based Accounting Standards” Strategic Finance, 85, no. 11 (2004): 5558.

[15] R. Hussey and A. Ong, “The IASB and the White Rabbit” Accountancy, 133, no. 1315 (2003): 9899.

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