IFRS is a dangerous fraud

Imagine if we decided that the US has so many problems that we might as well rewrite the Constitution. After all, the nation is polarized, there is racism, terrorism, unemployment, foreclosures and Hostess, manufacturer of the Twinkie, is bankrupt.  Consider that, instead, we follow China’s example.  After all, China has a growing economy, high employment, and they’re getting to manufacture all the iPads that we’re buying. Forget civil rights. Their economy is growing.  Let’s use their form of government instead.

This is the kind of insanity that keeps irritating us with IFRS.  Sure, U.S. GAAP has been carefully adapted to our economy over a full century, and it works, but there are still accounting problems (check out GroupOn this week).  We might as well throw it all away and switch to IFRS.
Every accountant should read Tom Selling’s persuasive attack on IFRS.  He names 10 claims about IFRS, and explains in painful detail why each is completely wrong and untrue:
  1. There are some large U.S. corporations that want to switch to IFRS.
  2. A move to IFRS would restore the public trust in accounting standards.
  3. U.S. GAAP is not superior to IFRS.
  4. IFRS is already widely adopted elsewhere.
  5. Even though IFRS may not be consistently applied elsewhere, the SEC can enforce compliance with IFRS as it sees fit.
  6. Costs of conversion to IFRS can be spread out over a long transition period.
  7. The U.S. will not experience any loss of sovereignty over its ability to set accounting standards.
  8. Bad things will happen to the rest of the world if the U.S. does not adopt IFRS.
  9. Bad things will happen in the U.S. if the U.S. does not adopt IFRS.
  10. All nations have the same goals for financial statements.
In an arena that unfortunately seems to be dominated by intertia and groupthink, Tom’s piece offers a rare glimpse of common sense.  Put into context, IFRS has the potential to wipe out 80 years of progress in developing US accounting standards and regulations.  The potential harm to our economy is unfathomable.  Read it.

About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

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