To be successful in the US capital markets, it is important to be financially bilingual – you have to speak both IFRS and US GAAP. Why, you ask, given that there are no current US plans to require or permit domestic public companies to use IFRS? Because we operate in a global marketplace and the impact of IFRS on US capital markets is not just about its domestic use in capital filings. IFRS requirements elsewhere in the world affect many US companies – public or private, large or small. Some of this is driven through cross-border, M&A activity. The IFRS reporting demands of stakeholders outside the US is another driver. Multinational US businesses consistently face IFRS challenges as standards change and more territories allow IFRS for statutory reporting purposes.
From an investor perspective, the need to understand IFRS is arguably even greater. US investors keep looking overseas for investment opportunities. Recent estimates suggest that over $7 trillion of US capital is invested in non-US securities. The US markets also remain open to non-US companies that prepare their financial statements using IFRS. There are currently approximately 500 non-US filers with market capitalization in the multiple of trillions of US dollars that use IFRS without reconciliation to US GAAP.
To assist investors and preparers in becoming financially bilingual, this guide (pdf, 3.4MB) provides a broad understanding of the major differences between IFRS and US GAAP, as well as insight into the level of change on the horizon.