IFRS Is Coming, What Does This
Mean for Tax?
Friday, April 11, 2008
Many companies are in the early stages of considering what impact the
transition to International Financial Reporting Standards (“IFRS”) from U.S.
Generally Accepted Accounting Principles (“U.S. GAAP”) will have on
financial reporting; however, are they also thinking about the impact it will
have on tax reporting?
by Christine Newell, Minneapolis,
MN, and Jay Kalis, Washington
Jay Kalis is partner-in-charge of the
WNT Income Tax and Accounting
Group. Christine Newell is a senior
manager in Minneapolis, MN.
IFRS is the accounting standard currently used in many parts of the world. Over
100 countries currently require or permit IFRS or a variation of IFRS. Many other
countries, including the United States, are planning to require or permit IFRS, or
are working on convergence with IFRS. As a result, IFRS seems to be the most
likely approach to achieving a single set of high quality, globally accepted
Panelists at the Securities and Exchange Commission (“SEC”) Roundtables in
December generally agreed that U.S. domestic companies registered with the SEC
should be required to file IFRS financial statements at some point in the future and
that the SEC should establish a timeframe for implementing the requirement. The
panelists included a broad spectrum of individuals from U.S. financial statement
issuers to auditors, regulators, and academics. Suggestions on a specific date ranged
from 2010 to 2015. Accordingly, while U.S. companies do not know the exact date
of transition, it appears that IFRS is coming and may be replacing U.S. GAAP in
the near future.
Impact on Tax Accounting Methods
Many elements in a company support the issuance of financial statements.
Consequently, converting financial statements from one reporting standard to
another would have broad implications beyond just financial (book) accounting.
Tax accounting, as well as many other areas in the company would be affected.
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