US Firms Clash Over implementation of IFRS

US FIRMS CLASH OVER IMPLEMENTATION OF IFRS. . . . . . . . . . . . . . . . . . . . . . . . ===> . . . . Ford Motor Co. has a special room for it.It isn’t a new hybrid car. The auto maker is preparing for a possible switch by U.S. companies to IFRS, a new set of accounting rules already implemented in the rest of the world by most of the countries. Ford supports the move toInternational Financial Reporting Standards (IFRS), saying the company would save money by simplifying and standardizing its accounting across all 138 countries where Ford operates.Charts, posters and other details about how Ford would make the transition to IFRS, fill the company’s “IFRS Room,” a converted conference room at the Company’s Headquarters. “For two days, we were thinking of it as the IFRS ‘war room,”‘ says Susan Callahan, Ford’s manager of global accounting policies, “but we couldn’t think of who we were at war with.”The answer: Companies like Hallador Energy Co., a small Denver coal-mining company that don’t do business outside the U.S. and opposes moving to the international standards. The answer: Companies like Hallador Energy Co., a small Denver coal-mining company that don’t do business outside the U.S. and opposes moving to the international standards.“We didn’t join the metric system when everybody else did,” says W. Anderson Bishop, Hallador’s chief financial officer. U.S. accounting rules are the Gold Standard, and why would we want to lower our standards just to make the rest of the world happy?U.S. and global rule makers already have worked for years to eliminate many of the biggest differences between IFRS and the U.S.’s generally accepted accounting principles, or GAAP.If U.S. companies are required by the SEC to move to IFRS, some numbers on theirfinancial statements will have to be calculated differently. (For example, a widely used method to value inventory under GAAP isn’t allowed under IFRS.) Accounting could become simpler and more flexible, since IFRS is based on guiding principles rather than GAAP’s detailed rules. Larger companies, big accounting firms and top rule makers favour theImplementation of IFRS.They contend that global unity would save companies money by consolidating their bookkeeping and make iteasier to raise capital around the world. Investors would have less trouble comparing companies based in different countries, and global securities-law enforcement would improve, supporters say.“It puts everybody on the same languageand gives everybody a chance to coalesce along the same standards,” said Joel Osnoss, Deloitte & Touche LLP’s global IFRS leader for clients and markets. “The quality of financial reporting is going to improve globally.” and gives everybody a chance to coalesce along the same standards,” said Joel Osnoss, Deloitte & Touche LLP’s global IFRS leader for clients and markets. “The quality of financial reporting is going to improve globally.”But some smaller U.S. companies complain that the change will be a costly headache. Estimates for how much the move would cost vary. James Barlow, chief financial officer of drug company Allergan Inc. and an opponent of IFRS, estimates the Cost of Implementation of IFRS could cost companies as much as 1% of revenues.Smaller companies also are less likely to have operations outside the U.S., or to have aspirations to expand or raise money globally. SEC officials are concerned about IFRS’s potential impact as well. “There are immediate questions when you talk to smaller companies as to whether they have the same benefits,” SEC Chief Accountant James Kroeker said. Some of them also think the Costs of Implementation of IFRScan’t be scaled to their company’s size, he said, so the expense would be a greater burden on them than on large companies. One way or another, the U.S. needs to adopt the global accounting standards in IFRS or else “the whole idea of having one single global market starts to fall apart,” . . . . . . . . . . . . . . . . . . .... . . .