Professionial opinions on switch to IFRS?

In October of 2008 the Journal of Accountancy released an article titled "Profession Reacts to IFRS plan." In this article many leaders and professors of both international and US standards stated their views on the plan for converging US GAAP with IFRS. It mainly consisted of two views, the need for GAAP to merge with IFRS and doubts of certain aspects of IFRS.

Two main opinions I'd like to focus on are that of, Jack T. Ciesielski, who is a former member of FASAC (Financial Accounting Standards Advisory Council) and David R. Campbell Sr., who is the head at Drexel University Department of Accounting. Ciesielski supports the move to IFRS but as he explains is "cautious." While Campbell thinks the switch will be difficult but in the end the US will respond positively towards the switch.

The main point that Ciesielski brings up is the lose of LIFO. Last in first out (LIFO) is used as an inventory cost method which takes the most recent purchases and expenses them as cost of golds sold. Most companies use it for tax purpose as it lowers corporate tax. If LIFO is not allowed, companies will be forced to use first in first out (FIFO). This will prove a challenge as mentioned above most companies in the US use LIFO. Using FIFO will increase profitability but in turn it will bring more corporate taxes. The question is, how will US companies deal with only being able to us FIFO.

On the other hand Campbell has faith that the educators in the US will response to the change in environment very well and produce good students that will soon provide leadership in the future. We in the US have developed the American Institute of Certified Public Accountants (AICPA), whose main duty is to keep introducing IFRS standards to people who aren't aware. This will help the shift to IFRS immensely. Also US GAAP and IFRS aren't completely different from one another. While they differ on some standards most of them share similar standards.

Full article can be found here: http://www.ifrs.com/updates/aicpa/joa_news_oct.html

-Frank.