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IFRS and Domestic GAAP Comparison David Andersen,...




IFRS and Domestic GAAP Comparison David Andersen, the CEO of Declining Corporation, was discussing with his CFO, Diane Corner, whether the company should adopt IFRS for financial reporting purposes. Declining Corporation is based in a country that permits the use of either IFRS or domestic GAAP. "Diane, reporting under our domestic GAAP is much more costly to the company than reporting under IFRS. I understand that fewer disclosures are required under IFRS. Moreover, IFRS provide more choices when it comes to applying accounting methods to our financial statements to produce the most favorable results. And, to be honest with you, the company is going to have to report its first operating loss in over 15 years if we continue to report under our current domestic GAAP. I certainly don't want that to happen while I'm CEO." "I hear you, David, but converting to IFRS might look bad to investors. What if the public finds out that we were trying to hide the opening loss or switched to IFRS to manipulate the bottom line? That could prove even more costly in the long run, while saving the company pennies now." 1. Referring to the conversation above, should Declining corporation prepare this year's financial statements in accordance with its domestic GAAP, or use IFRS? Justify your recommendation and address any concerns. 2. Assume you are the CEO of Declining Corporation, How would you reply to the CEO's suggestion? Summarize your response including why you opted for or against the adoption IFRS. 3. In your opinion, is there anything ethically wrong with the CEO's rationale for the adoption of IFRS? Explain. 4. As Declining Corporation's auditor, would you agree to the switch IFRS?,200


Paper#2920 | Written in 18-Jul-2015

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