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How Torturous Will IFRS Convergence Be?

Convergence of U.S. and international accounting standards may be arduous.

While it looks likely that the U.S. and international financial reporting regulatory bodies will

While it looks likely that the U.S. and international financial reporting regulatory bodies will agree upon a method for converging U.S. GAAP with global accounting standards, the process won't be pretty.

At least, that's according to Hans Hoogervorst, chairman of the International Accounting Standards Board (IASB), who has been working with the U.S. Financial Accounting Standards Board (FASB) to devise a process for merging the American principles with the International Financial Reporting Standards (IFRS).

Hoogervorst was quoted by Accountancy Age as telling the recent Economist CFO Summit that convergence to IFRS sometimes feels similar to "Chinese water torture." He predicts that while it would be a "very cautious decision," the U.S. will probably choose to adopt the set of rules within the next few months. If that happens, there is a bigger chance that India, Japan and other countries would take the United States' example.

However, Hoogervorst also warned that the U.S. is unlikely to embrace IFRS vs GAAP "lock, stock and barrel," the source reports.

In the meantime, multinational companies that already have to use IFRS when reporting overseas may want to take note of some new rules. FinancialCAD Derivatives News reports that IASB has plans to roll out additional hedging rules that would "encourage firms to re-examine their current risk management practices."

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