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How IFRS Affects Government Contractors

Government contractors also will be affected if IFRS is adopted.

Many U.S. accountants are watching to see if they will be required to learn and submit documents according to the International Financial Reporting Standards, but government contractors should also be aware of the changes new rules could bring to them.

CPA Peter A. McDonald writes for the Bureau of National Affairs that government contractors who currently use the Generally Accepted Accounting Principles - as well as observe the Cost Accounting Standards and Federal Acquisition Regulation - will now have to report under IFRS, so boards of directors and company management should both take note.

"In short, all individuals involved in the financial reporting process will need to become knowledgeable about IFRS, and most importantly on the key IFRS/GAAP differences," he says. In part, company leaders will need to start working through and identifying all the accounting issues - a challenge for contractors that don't have their own internal resources, McDonald notes.

According to the American Institute of Certified Public Accountants, the biggest difference between the two is that IFRS is less extensive on some issues and requires fewer details.

"IFRS will affect all companies, and adoption of IFRS is not a matter of if but when," McDonald concludes.