Analyze the measures your state and local community (COLUMBIA, SC) have in place to prepare hospitals for two (2) different types of threats to public health.  IFRS Essay Scott Lee, Sohail Sadeghi, Brenda Galeana, David Ahn California State Polytechnic University, Pomona Dr. Hefzi ACC 312 The International Accounting Standards Board has been responsible for developing a set of financial reporting standards. The goal is to provide a common accounting language and standard to enhance comparability and transparency of all financial reporting. Over the past decade, the International Financial Reporting Standards has emerged as the most dominant reference for financial reporting in most countries around the world. Although the Securities and Exchange Commission has publicly expressed its interest in transition toward adopting the IFRS, the US remains as one of the few countries to have yet adopt IFRS. IFRS standards are used in more than a 100 countries. One of the most notable development in the recent past is when the European Union shifted to the use of IFRS standards with the aim to harmonise books of accounts. The United States is one of the big economies that has not entirely adopted IFRS accounting standards. Generally Accepted Accounting Principles (GAAP) are more common in the United States, although there have been indications of inclination towards a switch to IFRS standards like in the case of the European Union. Proponents of a switch to IFRS standards in the United States maintain that the cost of implementing IFRS could be offset by the compliance to the standards (Christopher & Armstrong, 2010). The field of financial information and the question of its normalization have experienced a lot of changes in the past five years. The rather weak track of the International Accounting Standards Committee (IASC), surrounded by many enemies, has been transformed into the International Accounting Standards Board (IASB), a regulator of bright colors willing to play a predominant role. Indeed, the European Union hopes that the IASB can help it to build a single financial market, and others see it as the ultimate hope of restoring the credibility of financial reporting after the disastrous events that have occurred in the United States. The IASB is quite different from the IASC, both in its weight vis-a-vis governments and companies, and in its standardization process. The IASB is still going through, however, its honeymoon period. It remains to be seen whether the IASB will be able to produce reliable standards and whether the supervisory boards will be able to demand uniform compliance with these standards. We will analyze the international accounting standards first by studying its historical evolution, then by explaining pros and cons of international accounting standards, developments of International Financial Reporting Stands (IFRS), and finally present the current status of International Accounting Standards in U.

1. Analyze the measures your state and local community
(COLUMBIA, SC) have in place to prepare hospitals for two (2)
different types of threats to public health.
IFRS Essay
Scott Lee, Sohail Sadeghi, Brenda Galeana, David Ahn
California State Polytechnic University, Pomona
Dr. Hefzi
ACC 312
The International Accounting Standards Board has been
responsible for developing a set of financial reporting
standards. The goal is to provide a common accounting

2. language and standard to enhance comparability and
transparency of all financial reporting. Over the past decade, the
International Financial Reporting Standards has emerged as the
most dominant reference for financial reporting in most
countries around the world. Although the Securities and
Exchange Commission has publicly expressed its interest in
transition toward adopting the IFRS, the US remains as one of
the few countries to have yet adopt IFRS.
IFRS standards are used in more than a 100 countries. One of
the most notable development in the recent past is when the
European Union shifted to the use of IFRS standards with the
aim to harmonise books of accounts. The United States is one of
the big economies that has not entirely adopted IFRS accounting
standards. Generally Accepted Accounting Principles (GAAP)
are more common in the United States, although there have been
indications of inclination towards a switch to IFRS standards
like in the case of the European Union. Proponents of a switch
to IFRS standards in the United States maintain that the cost of
implementing IFRS could be offset by the compliance to the
standards (Christopher & Armstrong, 2010).
The field of financial information and the question of its
normalization have experienced a lot of changes in the past five
years. The rather weak track of the International Accounting
Standards Committee (IASC), surrounded by many enemies, has
been transformed into the International Accounting Standards
Board (IASB), a regulator of bright colors willing to play a
predominant role. Indeed, the European Union hopes that the
IASB can help it to build a single financial market, and others
see it as the ultimate hope of restoring the credibility of
financial reporting after the disastrous events that have occurred
in the United States. The IASB is quite different from the IASC,
both in its weight vis-a-vis governments and companies, and in
its standardization process. The IASB is still going through,
however, its honeymoon period. It remains to be seen whether
the IASB will be able to produce reliable standards and whether

3. the supervisory boards will be able to demand uniform
compliance with these standards. We will analyze the
international accounting standards first by studying its
historical evolution, then by explaining pros and cons of
international accounting standards, developments of
International Financial Reporting Stands (IFRS), and finally
present the current status of International Accounting Standards
in U.S.
Historical developments of IAS
The International Accounting Standards board (IASB) was
formed in the year of 2001 and has changed over these few
years, it has not been around that long. It replaced “The
International Accounting Standards Committee”, which started
in 1973. These changes, which will be discussed later, were to
create an even stronger foundation for the IASB, its primary
responsibility has been to develop International Financial
Reporting Standards (IFRS). Establishing International
Accounting Standards is necessary for all accountants to abide
by, these boards like the IASB is one of many to help establish
good accounting practices and to try and prevent issues like
fraud or the manipulation of financial statements. There are
several scandals that occurred throughout the early 2000’s
alone, which will be discussed and why they impacted many of
the regulations that were implemented on after.
To begin, it is important to understand the foundation of where
it began. The international Accounting Standards Committee
(IASC), dates to 1973, it was an agreement between accountants
that various states, initially 10, joined such as USA, Mexico,
Germany, France and the UK. Interesting fact, the committee
started with 9 members which were a variation of mixed
backgrounds and increased their members over the year until it
went back to the solid number of 14 members until today’s date.
There are two main objectives that derive from International
reporting and they are one, “to formulate and publish in the
public interest accounting standards to be observed in the
presentation of financial statements and two to promote their

4. worldwide acceptance and observation; and to work for the
improvement and harmonization of regulation accounting
standards and procedures relating to the presentation of
financial statements.” The members on the board hold important
roles as they are the ones overseeing the IFRS. Prior to the year
of 1973, the idea of establishing some principles first arose in
the early 1950’s following World War II, economic integration
and its related increases in cross-border capital flows. There
intentions were to be able to create harmony and to try and
reduce all the different accounting concepts that were being
used in capital markets around the world. Soon after, around the
1960’s, they replaced harmonization with the idea of
convergence or a unified set of accounting standards that could
be applied to all or most of the capital markets. There is many
events, prior to the formation of the IASC. In the year of 1962,
there was an international congress of accountants meeting, it
was the 8th meeting, hosted by The American Institute of public
Accountants (AICPA), those who attended really pushed
forward the idea to develop or create some set of standards for
auditing, accounting and reporting. Countries such as the United
Kingdom and Canada, along with the AICPA worked together to
discuss differences they each shared and continued to do this
for about ten years, even discussing what they believed to be
the best practices. “International Accounting (New York:
Macmillan, 1967) was the first textbook on international
accounting. It was written by Professor Gerhard G. Mueller,
who later became an FASB member by the mid-1980s,
international standards (IAS) seemed to lack clear objectives
and guiding principles for structuring their content, but a new
stage would begin in the life of the organization. Indeed, the
IASC was going to conclude an agreement with the
International Organization of Securities Commissions (IOSCO),
whereby the standard setter agreed to review its standards so
that they could become the globally recognized reference
framework for the presentation of the financial information
published by companies seeking a listing on several stock

5. exchanges. IOSCO wanted to standardize the rules for listing
companies in countries other than their country of origin, or
secondary listing rules. For the first time in its history, the
IASC had a specific goal to guide its decisions and a direct role
in a regulatory structure. In addition, with the support of
IOSCO, the IASC could become the dominant standard setter
globally.
The partnership with IOSCO resulted in a draft of amendments
and improvements, the objective of which was to eliminate
accounting policy choices and reduce the flexibility of
standards. While the project encountered difficulties, it ended in
1993, when, to the great disappointment of the IASC, the range
of standards developed was rejected by IOSCO. The official
argument was that a lack of rigor remained in the revised
standards. Some noted, however, that the German company
Daimler-Benz went public in the United States in 1993,
becoming the first German company listed in New York. It is
possible that the interest shown in international standards by the
Americans, who had a very strong influence in IOSCO, was in
fact motivated by the desire to attract European companies to
American stock exchanges. The arrival of Daimler had changed
the game, the recognition of IAS standards, which was only a
means, no longer seem necessary to achieve the goal.
Finally, the IASC survived this failure, and under a new
Secretary General relations with IOSCO resumed. At the IOSCO
Annual Congress in Paris in 1995, the two organizations
concluded a second agreement and launched a second program
to revise international standards. This new program not only
proposed the improvement of existing standards, but also the
promulgation of new standards dealing with subjects such as
provisions, permanent depreciation and, of course, financial
instruments.
In addition, the IASC became the IASB and many rules and
regulations have been added or modified over the course of its
existence due to fraud, accounting malpractices or other
situations, which have increased over the years. Let’s briefly

6. discuss a scandal that occurred in early 2001, known as the
“WorldCom Scandal.” This scandal was very publicized by the
media. It involved a telecommunication company named
WorldCom, their CEO at the time Bernie Ebbers was one of the
involved personnel. They would inflate their assets for as much
as $11 Billion, which eventually lead to 30,000 jobs being lost
and a total of $180 Billion dollar lost for investors. It was such
a huge blow for the company, losing so much. They hid it from
the books for a few years by “underreporting line costs by
capitalizing rather than expensing it and inflated their revenues
with fake accounting entries.” It was their internal auditors who
eventually found the fraud and uncovered the truth of falsifying
and manipulating statements to appear otherwise. It is after this
scandal that congress passed the Sarbanes-Oxley act, which was
another new regulation to help prevent scandals like these from
reoccurring. The Sarbanes-Oxley act was approved and passed
in 2002, one year after the IASB was formed. The acts intention
was to simply “to protect investors from the possibility of
fraudulent accounting activities by corporations. The SOX Act
mandated strict reforms to improve financial disclosures from
corporations and prevent accounting fraud.” Many investors
invest in a company because they believe in its success and
profitable returns, by analyzing statements that auditors
prepare, and it is unfair for investors to have lost so much in the
WorldCom scandal. If they had known of the situation, they
would have never invested in the company.
Developments of IFRS
The International Financial Reporting Standards (IFRS) is
continually developing and growing since the formation of the
Accounting Standards Committee in 1973. The IFRS include
existing IAS and interpretations issued by the IASC, as well as
standards and interpretations issued by the IASB (Albrecht,
David). The main mission and goal of the IFRS was and is to
create a set of principle based standards that overrides any one
nation’s set of standards in order to be unbiased and equitable
to all. Compliance to these standards are voluntary, since the

7. International Accounting Standards Board has no authority to
enforce them. More and more countries are basing their national
accounting standards on international accounting standards.
Many countries are still in the transition phase in terms of
adopting IFRS. The United States remains as the only major
world power that has not adopted the IFRS.
IFRS provides general guidance in preparing financial
statements which is extremely important for large companies
that have subsidiaries in different countries. The advantages of
achieving convergence with the IFRS would be numerous. The
economy will benefit because of the increase in growth of
international business. Financial statements prepared by using a
common set of accounting standards would further help
investors better understand investment opportunities. This could
encourage international investors to invest which would
ultimately lead to an increased flow of capital. The
comparability of financial statements under IFRS will be
improved if the adoption of IFRS expands (Bogopolsky, Alex).
One may argue that disadvantages of the IFRS would be that
even if IFRS was implemented, differences in financial
reporting will continue to exist. This is because financial
statements would not be identical in different countries because
of differences in national laws, economic conditions, and
objectives. Properly evaluating investment opportunities in any
country requires that the investor understand the culture of that
culture. Countries could interpret IFRS differently than other
countries which would completely negate any comparability.
The most noteworthy disadvantage of IFRS is the cost of
application by companies. The costs would include the change
in internal systems to be compatible with the new reporting
standards.
Overall, there are more advantages to IFRS than there are
disadvantages. As businesses continue to grow and expand, a
thorough knowledge and understanding of IFRS is essential.
The world’s economy is becoming more integrated by having a
common accounting language. The major difference between

8. IFRS and GAAP is that research and development costs are
expensed in the US GAAP. IFRS expenses research costs and
capitalizes development costs. IFRS has a different probability
threshold and measurements are objective for contingencies.
IFRS also relies more heavily on fair values and has less
specific requirements when it comes to recognizing revenue.
The conceptual difference between IFRS and U.S GAAP with
respect to accounting for research and development activities is
the fact that IAS assumes that in certain instances the business
is able to identify expenditures during the development phase of
the project that fulfill the requirements to be recognized as an
intangible asset.
Status of IAS in U.S.
“Adoption is the only way to achieve a single set of global
financial reporting standards - an objective that both the
International Accounting Standards Board and Financial
Accounting Standards Board have publicly endorsed on many
occasions” - IASB Board of Trustees. Although the IASB wants
the U.S. to adopt IFRS, it is unlikely that the U.S. will as it
tends to be much more costly than convergence. Adoption
would mean that the SEC would set a specific timetable when
publicly listed companies would be required to use IFRS as
issued by the IASB. Convergence would mean that the U.S
FASB and the IASB would work together to develop compatible
accounting standards over time. More convergence will make
adoption easier and less costly. The United States has claimed
to be working toward developing a single set of high quality
financial statements for all investors. However, the United
States developed and expanded their own set of standards in
line with its people’s need instead of converging with
international standards. Supporters of adoption believe that
convergence alone will never completely eliminate all the
differences between the two sets of standards.
Reasons Hindering the Adoption of IFRS Standards

9. Although there are many proponents for making a switch to
IFRS standards within the United States, this move would be
marked by a number of considerable challenges. Change is not
always welcome, particularly because the U.S. GAAP approach
has been used for a long period of time. Carrying out the
changes that will ensure that IFRS is entirely instituted is
arguably the most challenging issue that corporations have to
overcome. Publicly listed companies will also have to incur
expenses in order to make the transition possible. Operations at
the workplace are likely to be affected adversely as a result of
adjusting the means of partaking operations (Byard, 2011).
Corporations in the United States do not have to dig very deep
to find solutions to some of the problems they experience
during such a transition. The case of the European Union is one
that offers guidance. Time is one of the solutions to most of the
problems that may arise. The switch to IFRS started in 2002 and
ended in 2005 in the EU (Christopher & Armstrong, 2010).
Adequate time allocation for the evolution solves issues such as
change resistance and expenses are stretched out. Other
solutions include use of expertise workforce and incessant
monitoring of the entire process. Using knowledgeable
employees to facilitate the switch is a broad topic but involves
strategies such as offering training. Continued assessment of the
corporation in regards of adopting the new standards ensures
that progress is maintained as it is not an abrupt switch.
Using IFRS Standards
For the United States to consider adopting the IFRS standards,
it has to appreciate some of the unique differences that exist.
Inventory Costs
IFRS does not allow the last in, first out (LIFO) technique for
accounting for inventory costs. Both LIFO and FIFO (first in,
first out) estimates are used the predominant accounting
standards in the United States (GAAP). The IFRS standards
approach is more inclined towards inventory costing since it
allows for enhanced comparability between corporations in
different countries.

10. Accounting for Intangibles
IFRS is proven to be “principle based” in the way that it treats
acquired intangible assets. The same types of assets are
recognized at fair value under U.S. GAAP, while IFRS
standards only recognize if such assets will possess future fiscal
benefit, or it has measured and verifiable reliability. The latter
approach is more revealing of the nature of the assets that a
public company owns.
Accounting for Write Downs
If inventory is written down using IFRS standards, the action
can be reversed by following specified criteria. The GAAP
standards predominantly used within the United States does not
allow for this and inventory written down cannot be reversed.
IFRS standards allow for rectifications to be made where found
necessary, and is hence a better accounting approach.
Deferred Tax on Asset or Liability
United States’ GAAP recognizes daggered tax on asset or
liability as current/non-current depending on the asset/liability
for which the tax has been deferred. On the other hand, IFRS
standards distinguish all deferred taxes as current. In this case,
U.S. GAAP is the better technique since it is more thorough
although the ultimate effect is not significant (Cunningham,
2009).
Current Agreements and progress
The Securities Exchange Commission (SEC) announcement to
shift U.S. based companies from the Generally Accepted
Accounting Principles (GAAP) to International Financial
Reporting Standards (IFRS) caused a lot of debate on the
accounting standards used within the United states. Many
accountants held the view that such a switch would most likely
be based on good judgment (Annita Florou, 2012). It is evident
that there are numerous benefits of using IFRS over U.S. GAAP
and this is adequate to form an argument for exclusively using
the approach (IFRS). The United States is a leader in global
trade and hence requires companies set up to compete at such a
stage. Using techniques that are utilized in such a level is one

11. of the steps that may endow a company with the potency to not
only survive, but also to thrive. The global market is also larger
than the American one and this means that IFRS offers more
opportunities for success as compared to U.S. GAAP.
Furthermore, the code of professional conduct has been
implemented and practiced by many accountants across the
world. An agreement of rules and principles for which
accountants in public practice, business and academia agree to
follow. “The IFAC code relevance for U.S. practitioners has
grown as business has become increasingly global and as the
AICPA has begun the process of converging its Code of
Professional Conduct with the IFAC guidance (Allen, 2008).”
Pros and Cons of IAS
The International Accounting Standards (IAS) has set a path
since the 1970s to make business around the world an easier
process. Through IAS, the International Financial Reporting
Standards (IFRS) has been an international comparability set of
standards for companies worldwide. IFRS has been adopted in
more than 100 nations and has been the foundation for public
companies. Recently, former President Obama claimed for a
high-quality process of global accounting standards. As US
companies move forward, the Securities Exchange Commission
will develop a roadmap to make international comparability
easier for US public companies. From the possible adaptation of
IFRS in US business’, there are several pros and cons that will
be dealt with as a result. These included global comparability,
cost barriers, and enforcement among companies and nations.
There are two ways that IAS has made this process a reality to
businesses in the United States. The first of the paths that has
set forth in IAS is contributed to global comparability. Global
comparability has made it possible by reducing barriers from
businesses internationally. Through this process, there are pros
and cons that come through this rule. Companies through IAS
are now able to keep their two sets of books to comply with
countries worldwide. On the other side, this task may be

12. difficult for smaller business. This is due to the high cost of
international compliance. Secondly, global comparability has
allowed a cross-border investment. This compliance of
documentation worldwide has made it a consistency among
investors that have paved the way through the financial reports.
To restate, IAS has made it easier for investors to share
financial reports. Since doing all these new changes in one's
own business, it does increase the cost that companies have to
spend on the financial statements. Although this con of cross-
border investment might seem like as if the companies spends
too much money on financial reporting, but, in reality it opens
up the gate to many investors that may want a part of a certain
company. But, in comparing the pros and cons of IAS, once can
conclude that there is a major difference between US GAAP and
IFRS. Since the GAAP is used solely in the United States, it is
more rule based rather than IFRS which has less regulations due
to the compliance of worldwide companies. In conclusion, the
optimal target IAS inclines towards providing outstanding
consistent reports worldwide.
The International Accounting Standards has also allowed for
cost barriers to be implemented from company to company.
These cost are associated mostly with small to midsize
companies since the new accounting regulations may be
overwhelming. On the other hand, for large corporations, these
costs are implement with the training and develop of the
company values. For them, such cost are not as material and
may not be as cost prohibited. Another barrier that been
implemented through IAS deals with the flow of capitals for
investors and stakeholders. These investors and stakeholders
find it convenient to compare business conduct. To some
investors, they may find re-educating themselves on accounting
reports and statements as a con but in reality they are learning
the new baseline in which companies globally will be
administered. A cost barrier that has not been as disputed
among professionals is ideology that these adaptations will
increase the work and the growing education among

13. accountants. For this adaptation, we may see this as having a
positive outcome rather than negative views. For instance, this
shift in education new accountants on the same page among the
world by leading consistent accounting regulations. In general,
the adaptation of these ideas for young professionals will
ultimately benefit companies in the future by asserting that new
accountants be in line with regulation. On the other hand, these
new changes in the accounting method for IAS will make audit
fees increase as well as many new errors. This is highly due to
the fact that many rules under US GAAP cannot or are different
with those under IFRS. This will provide some errors for the
audit when performing an audit that has changed from US
GAAP to IFRS. As a result, the take away from cost barriers
deals with the single fact that changing to an international
accounting remote, will untimely raise cost at the begging, but
will eventually benefit companies when comparing books
internationally.
Advantages of using IFRS Standards
Easier to compare Performance
One of the reasons for the interest within the United States in
IFRSs is that the global economy has largely done the same.
Europe has already made the transition, and other significant
economies such as Canada, China, Japan and India are making
similar advances. Corporations in the United States would
benefit from taking up IFRSs since they would be in a position
to easily compare their accounts with other organizations across
the globe that are using the same standards.
Widely Understood
A public company can easily be understood on the global
economy as IFRS standards have become extensively utilized in
most regions of the world. In addition, the continued adoption
of IFRS standards means that a large portion of the investor
pools will use these standards when deliberating about
investment options. Ease of comparison hence presents more
investment opportunities (Annita Florou, 2012).
Up-to-Date Accounting Standards

14. Using similar standards with other corporations on a global
scale means that all players use updated accounting techniques
that enhance individual competitiveness in the global market.
While adopting these international standards for the basis of
worldwide understandability, we must now focus on the
enforcement on these standards and would would come from it.
While the US does have an effective strategy for using the
GAAP as their base, other countries may find it difficult for the
implementation due to the various differences among their
political and economic system. From a culture perspective,
these countries will view this factor due to the convergence of
the financial reporting which will create more problems for
companies trying to adapt. Reason behind the enforcement of
US GAAP mainly draws back to the factor that this system
creates values that other countries don't have which I why it
made to said to be a more competitive factor among companies.
In reality, their is not one single systems that will be fitted for
all corporations. Rather, IFRS will be used interchangeably for
all countries that will better suit their needs.
As a result, adopting IFRS will better global comparability,
have cost barriers, and will lead to some enforcement problems.
On the other hand, by creating IFRS compatibility around the
world, it will decline the need for competition and different
incentives that make business. Quality will suffer because of the
compromises that have been made worldwide to achieve and
negotiate with politics and economics. But in reality, many
professionals continue to support the need for a single set of
accounting standards that will ultimately revolve around IFRS.

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