IFRS
This gives 'going global' a whole new meaning!
Some of us, I for one, have procrastinated about ‘going mobile, going global’ in so many ways; although, I have had clients from other sides of the world call me about problems with their QuickBooks files. I for one have ‘stood with my head in the sand’ when it comes to mobile accounting solutions, having grudgingly spent time with QuickBooks Online in the past when I considered it ‘far inferior’.
I participated in the Beta program for the QBOL-Accountant product and was happy to see that Intuit was providing improved tools for QuickBooks and Accounting Professionals to use. In the last few months I have become increasingly aware of more and more apps that are now part of Intuit’s Cloud solutions to connect with QB Online and provide improved functionality. Some of these solutions even come from the ‘international market’ and have been designed to provide needs that foreign users felt were essential for what is really a QBOL US based-core that has been given a slightly international flavor.
Of course a few years back, QuickBooks desktop products added foreign currency features, which makes QB more international friendly in some ways. That's a change of a sort, I guess.
Many years ago, when I did a lot of business ‘off-shore’, it took hours to send a teletype or a fax, and in some cases took several minutes to simply get an international telephone connection. Today with text messaging and email and all the other forms of instant communications business is conducted 24 hours a day, 7 days a week, 365 days a year. So while I may have problems setting up more than one email to work on my smart phone, I admit ‘times are a changing.’
Yes when it comes right down to it, the world is changing and is changing faster than many of us, including myself would like. With the monumental growth of international markets made available by the internet, more and more companies are doing business ‘outside their resident boarders’, and not just US companies. In fact emerging nations have fostered entrepreneurs with the majority of their customers’ out-of-country.
With this growing international flavor of business, and multi-national ownership, as well as changing domiciles of public businesses to take advantages of one countries tax advantages over another, even the fundamentals of accounting we have considered normal are changing. No longer are United States accounting standards considered the ‘world’s standards’, a new kid has not only emerged, but is maturing into the world’s accounting.
With the increasing rise in the International Financial Reporting Standards we cannot remain aloof in the belief that our current accounting standards and software are going to be sufficient for future purposes. The International Financial Reporting Standards (IFRS) are a set of accounting standards, developed by the International Accounting Standards Board (IASB), that are becoming the global standard for the preparation of public company financial statements.
The IFRS process began decades ago as an effort by industrialized nations to create standards to be used by developing and smaller nations. But as business has become increasingly more global, accounting powers such as auditors, regulators, and investors, began to recognize the importance of a single common standard for all financial reporting.
Today some 120 nations and jurisdictions either permit or require IFRS; around 90 of these countries have fully conformed to IFRS as promulgated by the IASB. The European Union (EU) has adopted virtually all of the IFRS. The United States Securities and Exchange Commission (SEC) is considering a date to allow U.S. public companies to use IFRS, and perhaps even make its adoption mandatory. You can also bet both the Financial Accounting Standards Board (FASB) and American Institute of CPAs (AICPA) will play a major role on the adoption of IFRS in the US.
The increasing acceptance of IFRS means that it is not only likely to become the ‘world’ standard, but we in the US will have to bow to this international standard. We will not be long to ‘bury our head in the sands’ as accounting ostriches. IFRS will affect almost every aspect of a company’s operations, from its financial reporting to its information technology systems, to its tax reporting, and the way the company tracks stock-based compensation.
Since most professionals involved in the financial industry ranging from accountants, to bookkeepers, to financial consultants, and even software developers will in fact be impacted by changes associated with IFRS, now is the time to start becoming knowledgeable about these changes. Professional associations and industry groups need to include IFRS into their training programs. For the accounting professionals of the future, our colleges and universities need to include IFRS in their curricula now, rather than waiting until after it is fully adopted. Accounting software vendors who are focusing on the ‘global’ availability of their software due to the growing emphasis on the cloud need to insure that they are providing tools that are IFRS compliant, rather than simply trying to force US based GAAP standards on users in foreign countries.
With so much ‘emphasis’ on us all going ‘global’, we had best understand that the definition of global is changing and we must come to fully understand and endorse the new kid on the block if we are going to play the global game.