Even though FASB (Financial Accounting Standards Board) has been working with the IASB (International Accounting Standards Board) towards convergence of US GAAP with IFRS since 2002, the SEC (Securities and Exchange Commission) has only recently in 2010, started to study whether or not to move from US GAAP to IFRS.
The SEC’s decision holds significant weightage as US is one of the biggest economies and its adoption of IFRS would truly make the international standards global. But a recent staff report from SEC made it clear that the IASB cannot be the lead. The report released in July talks about several areas in which the two accounting approaches differ, such as impairment models for property, plant, and equipment, inventory and intangible assets. Another point the report mentions is the cost that will be incurred by large and small corporations for switching from GAAP to IFRS. This might be a good point to put in use the cost benefit convention- that relaxes GAAP requirements if the cost of reporting it under GAAP exceeds the benefit. The question here will be whether the cost of switching to IFRS will provide more benefits to the involved parties.
The coming few months will through some more light on what the future of the convergence project will be from the US point of view.