Professional CPA Business Services

A move from GAAP to IFRS?

In all likelihood, generally accepted accounting standards (GAAP) in the United States will be replaced gradually by international financial reporting standards (IFRS). IFRS, in use in Europe, provides some benefits over GAAP regarding financial reporting to investors. Some companies with a worldwide presence may benefit from changing their standards to IFRS which enjoys a greater popularity worldwide.

The SEC has presented a roadmap that public companies can use to make the transition. If milestones in the roadmap are reached, required use of IFRS by U.S. public companies by 2014 could be mandatory; In fact, certain public companies will be able to use the international financial reporting standards as soon as 2010.

No doubt, it will take several years for the transition to be made by private sector businesses, although they will eventually follow public corporations to using IFRS. One can expect to hear more buzz about IFRS in 2010 and 2011.

New taxes will support cap and trade legislation

Cap and trade is the government‘s program that limits (caps) the quantity of emissions stemming from energy use. June saw the House approve a bill that aims to cut emissions 17% by 2020 (10 years hence) from levels prevailing in 2005. There are several bills currently in the Senate committee on cap and trade. President Obama promised the world conference in Copenhagen in December that the U.S. would reach significant emissions reduction milestones by key dates. If a cap and trade program is put in place, payments by businesses that exceed their allocated energy usage will essentially mean a tax on doing business.

If cap and trade does not pass, Congress could enact an emissions tax. The Congressional Budget Office reports that a good alternative to cap and trade would be a tax on emissions because it will be less costly for the government to put in place. In either case, it will tack on extra costs for businesses.