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Are IFRS and US GAAP Converging? Preliminary Evidence from European Union Companies Listed on the New York Stock Exchange
Susan Boedeker Hughes,
University of Vermont
James F. Sander, Butler University
ABSTRACT. Since its founding in 2001, the IASC Foundation has focused its attention on achieving convergence of national accounting standards and IFRS. We focus on the convergence of IFRS issued by the IASB and US GAAP and analyze the change in 20-F reconciliations for 2004 to 2005 in 40 EU companies that filed as foreign registrants listed on U.S. exchanges. We use the 20-F reconciliation amounts as the means to determine the 2005 IFRS-based and the 2004 national GAAP-based statements, and analyze where differences in the comparability of reported information and income statement reconciling items occur. We find that the adoption of IFRS did not uniformly result in comparability in net income, net assets, RONA and EPS calculations, and that some reconciling items increased from 2004 to 2005. The lack of comparability in light of the IASB/FASB announcement that no significant changes to IFRS will occur prior to 2009 is discussed.
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