To the development of high quality compatible

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to the development of high-quality, compatible accounting standards that could be used for both domestic and cross-border financial reporting. At that meeting, both the FASB and IASB pledged to use their best efforts to (a) make their existing financial reporting standards fully compatible as soon as practicable and (b) to coordinate their future work programs to ensure that once achieved, compatibility is maintained. In May 2011, the SEC proposed a transition method to incorporate IFRS into the U.S. report- ing system. The SEC delineated the perceived benefits and risks of this possibility but did not lay out a definitive timeline for use ofIFRS in the U.S. Larger companies have begun to issue IFRS compliant financial statements, and foreign private issuers on U.S. stock exchanges are currently permitted to file financial statements in accordance with IFRS without reconciliation to U.S. GAAP as was previously required. Are financial statements issued under IFRS substantially different from those issued under U.S. GAAP? At a broad level, the answer is no. Both are prepared using accrual accounting and utilize similar conceptual frameworks. Both require the same set offinancial statements: a balance sheet, an income statement, astatement of cash flows, astatement of stockholders' equity ,and asetof explanatory footnotes. That does not mean that no differences exist. However, the differences are typically technical in nature, and do not differ on broad principles discussed in this book. Indeed, recent accounting standards issued by the FASB and the IASB, such as the accounting for acquisitions of companies, were developed jointly and issued simultaneously to minimize differences as the two standard-setting bodies work toward harmonization of international standards. At the end of each module, we summarize key differences between U.S. GAAP and IFRS. Also, there are a variety of sources that provide more detailed and technical analysis of similari- ties and differences between U.S. GAAP and IFRS. The FASB, the IASB, and each of the "Big 4" accounting firms also maintain Websites devoted to this issue. Search under IFRS and PwC, KPMG, EY and Deloitte; the two standard-setting bodies also provide useful information, see: FASB ( ) and IASB ( ). BUSINESS INSIGHT Accounting Quality In the bear market that followed the bursting of the dot-com bubble in the early 2000s, and amid a series of corporate scandals such as Enron, Tyco, and WorldCom, Congress passed the Sarbanes-Oxley Act, often referred to as sox. SOX sought to rectify perceived problems in account- ing, including weak audit committees and deficient internal controls. Increased scrutiny of financial reporting and internal controls has had some success. A report by Glass, Lewis and Co., a corporate- governance research firm, shows that the number of financial restatements by publicly traded compa- nies surged to a record 1,295 in 2005-which is one restatement for each 12 public companies, and more than triple the 2002 total, the year SOX passed. The Glass, Lewis and Co. report concluded that
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