Are US Academics And Professionals Ready For IFRS?

Murad Moqbel
PhD Student
Texas A&M International University
Laredo, TX 78041
Phone: 620-340-0888
Email: muradmoqbel@dusty.tamiu.edu

Aziz Bakay
Texas A&M International University
Laredo, TX 78041
Phone: 956-489-0075
Email: azizbakay@dusty.tamiu.edu

Electronic copy available at: http://ssrn.com/abstract=1662162

 *Note: Authors are currently working on enlarging the data set and might expect different

results.

Abstract

International Financial Reporting Standards (IFRS) have been adopted by several countries

around the world as a common accounting and financial language. However, the US is yet to do

so. In this study, in my turn, I examine whether the US academics (accounting and auditing

students and professors) as well as practitioners (auditors, accountants, CPAs, and financial

analysts) are ready to embrace IFRS as a common accounting and financial reporting language. I

discuss the extent to which they are familiar and ready for IFRS as well as their perception about

the benefits and challenges in adopting IFRS. I further touch on IFRS Benefits and Challenges,

IFRS education, training, and information technology Role.

Introduction and Background

The fast pace of globalization and the international financial markets have stimulated the need

for a common financial language. This common language is IFRS which is under the auspice of

the International accounting Standards Board (IASB), an independent accounting standard-

setting body based on London. The IASB morphed from another organization called the

international accounting Standards Committee (IASC) that was established in 1973 (Kennedy

2010). Several countries around the world have already adopted IFRS and few are to follow.

Around 120 countries have completely or partially embraced International Financial Reporting

Standards (IFRS 2010). The European Union has made it mandatory for publicly traded

companies to use IFRS to prepare their financial statements (Brackney and Witmer 2005). Other

countries soon to follow include Canada and Korea which announced to adopt IFRS by 2011.

Electronic copy available at: http://ssrn.com/abstract=1662162

Mexico is planning to require all listed companies to report using IFRS in 2012. As for the USA,

the Financial Accounting Standards Board (FASB) and the International Accounting Standards

Board (IASB) in their meeting in September 2002 reached an agreement, called the Norwalk

agreement, to converge on a single set of accounting standards. They also agreed to make their

existing financial reporting standards fully compatible and to coordinate their future work

programs to maintain that compatibility (Hermann and Ian 2006).

There around 11,000 firms registered with the U.S. Securities and Exchange Commission (SEC),

of which about 1,100 are non-U.S. companies (Oracle Corporation 2008). In 2005, U.S. SEC

allowed non-U.S. firms to submit their financial statements in compliance with either U.S.

GAAP or IFRS; on the condition they reconcile discrepancies in the results between the two. But

in 2007, the U.S. SEC voted to drop the reconciliation requirement for financial statements for

the year 2007 (Smith 2008). The United States was scheduled to require all publicly traded

companies to prepare their financial statements based on IFRS by 2014 as it was announced by

the U.S. SEC in 2008 (Kennedy 2010). However, the U.S. SEC decided in February 2010 that

2015 might be the earliest possible date for IFRS adoption by the U.S., calling for more study of

IFRS (Defelice and lamoreaux 2010).

The US Generally Accepted Accounting Principles (U.S. GAAP) and International Financial

Reporting Standards have some similarities and differences. One of the differences is that U.S.

GAAP is rule-based of standards while IFRS is more of a principle-based set of standards

(Arthur 2005). The US GAAP is intended to enforce compliance by having detailed rules, while

IFRS is intended to improve transparency yet subject to implementers judgment.

Electronic copy available at: http://ssrn.com/abstract=1662162

This study attempts to examine whether the US academics (accounting and auditing students and

professors) as well as practitioners (auditors, accountants, CPAs, and financial analysts) are

ready to converge to IFRS as a common accounting and financial reporting language. I do this by

surveying and collecting data on the perception of a sample of academics and practitioners

regarding familiarity, readiness, benefits and challenges, and proper plans to be used in the

process of convergence in accounting standards. Results shows that (1) the majority of

respondents believe that auditors, accountants, and accounting students are ready for the

convergence to IFRS; (2) convergence to IFRS can increase global comparability; minimize

barriers to global competition for capital, enable investors to evaluate investment options in a

global marketplace, enable management and auditors to exercise more professional judgment,

create uniformity in global financial reporting including audit reports; (3) initial cost of

convergence, required changes in auditing standards, perceived uncertainties surrounding IFRS,

lack of sufficient involvement of global regulators in the IASB standard-setting process,

transition plan and issues pertaining to IFRS, lack of education, understanding, and experience

by preparers of financial reports with the use of IFRS, lack of coverage of IFRS in financial

accounting textbooks, lack of coverage of International Standards on Auditing (ISAs) in auditing

textbooks should be taken into consideration when making a decision about whether to adopt

IFRS or not; (4) a proper plan to transition all U.S. companies to IFRS requires IFRS training for

investors, management, auditors, and IFRS education in the accounting curriculum.

3
The perception of both academics and practitioners in this study are of importance to companies,

policy makers and regulators, investors, auditors, as well as educators in order to prepare for

convergence to the International Financial Reporting Standards endeavor.

The remainder of this paper covers IFRS benefits and challenges, IFRS education and training,

information technology role, research questions, research methods, results and discussion, and

conclusion.

IFRS Benefits and Challenges

Convergence to IFRS can provide benefits as well as challenges. One of the advantages of

having a one common set of financial standards is comparability of apple to apple in terms of

financial reporting of global companies (Smith 2008). Using IFRS can enable cross-border

investment and facilitates the flow and access to global capital markets (Anderson 1993). Other

benefits of IFRS to companies include reduction of diversity, complexity, and the possibility of

mistakes in the financial reporting process. As for the challenges, they can be cultural, political,

and legal (Rezaee et al 2010). The major challenge of converting to IFRS is costs associated with

the adoption. These costs can stem from staff training and education to personnel to prepare them

to use IFRS and from implementing information technology systems. The U.S. SEC estimates

that the transition to IFRS from U.S. GAAP in the first year of filing will cost U.S. firms

between 0.125 percent and 0.13 percent of their revenue, predicting that early adoption will cost

a firm $32M in 2010 (Johnson and Leone 2008). Another challenge to convergence is the

overcoming of the resistance to change as both academics and practitioners are used to US

GAAP and it will be very hard to change (Rezaee et al 2010). Several schools of businesses as

4
well as accounting programs here in the USA have shortages of professors as well as curriculum

that help teach IFRS.

IFRS Education and Training

Training accountants, auditors, financial analysts, valuation experts, and actuaries is a very

important step for convergence to IFRS. Industry groups as well as professional associations

have started to include IFRS in their training materials and testing, and several universities and

colleges started including IFRS in their curricula (Kroll 2009). Customized courses offered by

international subject matter experts are provided by some training firms such as IASeminars.

Those seminars can range from one day to several days customized to clients needs. The big

four have been of a great help in the training and education part of preparation to IFRS. For

example, Grant Thornton, in collaboration with IASeminars, has been offering IFRS courses as

well as guest speakers in Canada in preparation for IFRS (Grant Thornton 2010). Deloitte

Touch Tohmatsu is offering free e-learning modules on IFRS available to download on its

website upon registration as a public service (Deloitte Touch Tohmatsu 2010).

PricewaterhouseCoopers gave $700,000 grants in 2009 to colleges to speed up the preparation of

students for IFRS and international accounting (Kroll 2009). This grant is aimed at updating

instruction materials to include IFRS in 26 universities. In addition, PricewaterhouseCoopers is

offering IFRS Ready" program that consists of videos for students that explain IFRS and its

impacts (PricewaterhouseCoopers 2010). In further step towards preparation for IFRS, American

Institute of Certified Public Accountants (AICPA) announced in 2009 that CPA exams, starting

Jan. 1, 2011, for the first time will include testing on International Financial Reporting Standards

(Journal of Accountancy 2009). Since IFRS are principle-based standards, the way it has to be

5
taught to concentrate on reasoning and strengthening the judgment abilities rather than basing it

on memorization of rules.

Information Technology Role

Information technology can be of a great help for accounting, financial analysts, and auditors in

the process of transition to IFRS. Switching to IFRS will require a great amount of information

technology applications change. Firms financial departments will need to identify the scope of

the information applications needed by specifying the type of information they need from each

application. They will need to decide whether their current software such as Enterprise Resource

Planning (ERP), a management information system that integrates different areas such as

planning, inventory, purchasing, accounting, financing, marketing, human resources, etc, can

accommodate IFRS reporting, consider purchasing over-the-shelf software or customized new

systems, or even build in-house information systems. Some of information technology

applications that enable companies to generate reports that comply with current requirements and

respond quickly to new changing standards requirements are SAP ERP Financials, Oracles

PeopleSoft Financial Management, and Oracles enterprise performance management system.

Hyperion Financial Management is a web-based application that delivers global financial

consolidation, reporting, and analysis in several GAAPs including IFRS (Oracle Corporation

2008). Firms financial department will have to take into account whether to procure from small

service providers who might not have the expertise or from well-established and reputed

partners. Other things to be considered for the transition process to IFRS from the IT perspective

are training, time budget for implementation, and costs.

6
Research Questions

In order to expand our understanding of IFRS and its benefits and challenges, I conducted a

survey investigating the different perceptions of academics and practitioners, those who are

familiar with IFRS and those who are not, and those who think that they are ready for IFRS. An

effective convergence to IFRS requires all stakeholders including companies, executives,

auditors, actuaries, accountants, CPAs, and financial analysts, standard setters, regulators as well

as educators to be familiar with the differences between the US GAAP and IFRS as well as the

needed resources and enforcement (Rezaee et al 2010).

Changes in the accounting education and training is imperative in order to prepare for the

adoption of IFRS in the US. Those changes needs to be incorporated in the textbooks and

training materials.

Based on the above discussion, I address the following research questions:

RQ1: Do practitioners and academics have different perspectives regarding whether they are

ready to embrace IFRS?

RQ2: Are those who are more familiar with IFRS more likely to believe that convergence will

have more severe consequences than those who are not familiar?

RQ3: Do practitioners and academics have different perspectives regarding a proper plan to

transition to IFRS?

Research Methods

I adopted most of the questionnaire questions from Rezaee et al (2010). I then conducted a

survey of accounting academics and practitioners to measure their perception on the readiness,

7
benefits, challenges, and ways to adopt IFRS (see Appendix A). A survey was distributed to

junior, senior, and graduate level accounting students as well as PhD students and faculty

members teaching accounting in Texas A&M International University. Another set of surveys

was distributed to practitioners through Texas A&M International University accounting and

finance alumni emails list. I included a brief statement explaining the purpose of the survey and

pledging to share the results of the findings.

There are four main sections of the survey. The first section asks for demographic and

background information. The next sections ask respondents for their perception on familiarity,

readiness, benefits, challenges, and ways to facilitate the adoption of IFRS. I used the t-tes to

examine the differences in responses between different respondents mean.

Panel A of Table 1 shows that 28 responses were received from academics and 35 from

practitioners as well as the percentage distribution based on demographics.

Panel B shows that less than half of the respondents are familiar with IFRS, with a mean of 2.43

for academics and 2.40 for practitioners based on a 5-point scale. The differences in responses

regarding the degree of familiarity with IFRS between academics and practitioners are not

statistically significant. These results may tell us that respondents are not familiar with IFRS.

Results and discussion

The perspectives regarding challenges to moving towards IFRS are listed in order based on their

importance as represented by the mean coefficient of responses and are shown in table 1: lack of

8
education, understanding, and experience by preparers of financial reports with the use of IFRS;

lack of coverage of International Standards on Auditing (ISAs) in auditing textbooks; lack of

coverage of IFRS in financial accounting textbooks; required changes in auditing standards;

transition plan and issues pertaining to IFRS; Lack of sufficient involvement of global regulators

in the IASB standard-setting process; Initial cost of convergence; and last perceived uncertainties

surrounding IFRS. As for the perceived challenges for converting to IFRS, costs can lead the list

as mentioned earlier that the U.S. SEC estimates the cost of the first year of conversion per

company can be between 0.125 percent and 0.13 percent of their revenue (Johnson and Leone

2008). U.S. firms can learn a lot from the experience of Europeans and Canadians in order to

mitigate costs and avoid mistakes.

[Insert Table 1 here]

Results of the questions about a proper plan to transition all U.S companies to IFRS are shown in

Table 2. The majority of academic respondents (about 80%) reported training for auditors and

integration of IFRS education in the accounting curriculum to be proper plant for convergence to

IFRS. About 82% of academic respondents also thought that IFRS training for management is

important but less important for investors. On the other hand, around 86% of practitioners

believe that IFRS education in the accounting curriculum is crucial as a proper way to transition

all U.S. companies to IFRS.

As for the perceived benefits of convergence to a global set of accounting standards, both

categories results combined are listed in order based on their importance as represented by the

mean coefficient of responses in table 2: increase global comparability promoting a more

informed global marketplace; IFRS create uniformity in global financial reporting including

9
audit reports; minimize barriers to global competition for capital; position IFRS to be the

globally accepted accounting language; and IFRS enable management and auditors to exercise

more professional judgment. The differences in responses between academics and practitioners

are statistically significant only for one of the perceived benefits of IFRS which is create

uniformity in global financial reporting including audit reports.

[Insert Table 2 here]

So, from the combined list we can see that the less severe obstacles for convergence to IFRS

reported by respondents are: initial cost of convergence; perceived uncertainties surrounding

IFRS; and required changes in auditing standards; transition plan and issues pertaining to IFRS

to be the least severe obstacles for convergence to IFRS than academicians. To mitigate the lack

of education, understanding, and experience by preparers of financial reports with the use of

IFRS as well as the lack of coverage of International Standards on Auditing (ISAs) in auditing

textbooks, firms can utilize the free online learning materials provided by some of big

accounting firms and start the training and preparing plans for their accounting information

systems from now. Firms can also make use of the learning experience of other countries such as

Canada and the European countries. Schools need to start teaching and embed IFRS into their

accounting degree requirement as a preparation for IFRS by the time the U.S. SEC announces its

adoption to it.

Research questions results are presented in table 1, 2, and 3. RQ1 asks: Do practitioners and

academics have different perspectives regarding whether they are ready to embrace IFRS? Table

3 and panel C both present a comparison by academics and practitioners. In panel C, there is no

10
significant difference between academics and practitioners. Also when the answer is confined to

those who are familiar with IFRS, still there is no significant difference between the two groups.

RQ2 asks: Are those who are more familiar with IFRS more likely to believe that convergence

will have more severe consequences than those who are not familiar? Table 3 shows a

comparison of respondents by degree of familiarity. Respondents were divided into two

categories of not familiar and familiar. Regarding the extent of familiarity, choices 1, 2, and

3 = not familiar, while choices 4 and 5 = familiar. Significant differences were found on 4

answers. Those answers are the following: initial cost of convergence; and required changes in

auditing standards; position IFRS to be the globally accepted accounting language. Those who

are familiar with IFRS believed that the initial costs of convergence as well as the required

changes in auditing standards are much severe obstacles than those who are not familiar. In terms

of the benefits of the adoption of IFRS perceptions, the familiar respondents perceive that

positioning IFRS to be the globally accepted accounting language more than those who are not

familiar.

[Insert Table 3 here]

RQ3 asks: Do practitioners and academics have different perspectives regarding a proper plan to

transition to IFRS? Based on the respondents who are familiar with IFRS, there is only one

difference from the four proper plans listed in the questionnaire. This difference is in the proper

plan to transition all U.S. companies to IFRS requires adjustments to IFRS training for investors.

80% of those who are familiar with IFRS believe that IFRS training for investors as a proper

plan to transition all U.S. companies to IFRS as compared to only 50% of those who are not

familiar with IFRS.

11
Conclusion

Convergence to a global set of accounting standards can help global comparability in financial

reporting. Allowing non-U.S. firms to submit their financial statements in compliance with

either U.S. GAAP or IFRS in 2005 was a positive sign by the SEC that it has a serious intention

to a complete convergence between US GAAP and IFRS which in its turn contributes to the

achievement of global comparability. There are still several issues that need to be sorted out

before moving towards a complete convergence. The global acceptance of IFRS and its use by

several countries around the world urges the US to take serious steps to convergence.

In this paper, I examined three research questions, the first asks whether practitioners and

academics have different perspectives regarding whether they are ready to embrace IFRS. The

second asks whether those who are more familiar with IFRS are more likely to believe that

convergence will have more severe consequences than those who are not familiar. The third

examines whether practitioners and academics have different perspectives regarding a proper

plan to transition to IFRS. The answer to the first question was clearly no. There was no

significant difference between academics and practitioners in terms of whether they are ready for

IFRS. As for the second question, significant differences were found on 4 questions. Those

questions are the initial cost of convergence; required changes in auditing standards; and position

IFRS to be the globally accepted accounting language. Those who are familiar with IFRS

believed that the initial costs of convergence as well as the required changes in auditing

standards are much severe obstacles than those who are not familiar. In terms of the benefits of

the adoption of IFRS perceptions, the familiar respondents perceive that positioning IFRS to be

12
the globally accepted accounting language more than those who are not familiar. The answer to

the third question was only one difference which is that there is no difference between academics

and practitioners in the proper plan to transition all U.S. companies to IFRS.

Most respondents believe that comparability and uniformity of financial reporting including

audit reports under IFRS are the key principles of moving toward a single set of standards. ,

Convergence to IFRS is expected to minimize barriers to global competition for capital and

benefit all stakeholders including investors.

References

13
Anderson, A. 1993. The globalization GAAP. Management Accounting (August), 5254.

Brackney, Kennard S. and Philip R Witmer. 2005. The European Union's Role in International

Standards Setting. The CPA Journal. Vol. 75, Iss. 11 (Nov): 18-27.

Defelice and lamoreaux 2010. The SEC's IFRS Work Plan. Journal of Accountancy. Accessed

at: http://www.journalofaccountancy.com/Issues/2010/Apr/20102658

Deloitte Touch Tohmatsu. 2010. IFRS e-learning. Available at

http://www.deloitte.com/view/en_GX/global/services/Audit/global-ifrs-offerings-services/ifrs-

implementation-services/ifrs-elearning/index.htm

Grant Thornton. 2010. IFRS learning opportunities. Available at

http://www.grantthornton.ca/services/IFRS/IFRS_learning

Herrmann, Don and Ian P.N. Hague. 2006. Convergence: In Search of the Best. Journal of Ac-

countancy. Vol. 201, Iss. 1 (Jan): 69-73.

Johnson and Leone. 2008. SEC: Early IFRS Adoption Will Cost Firms $32M. CFO Publishing

LLC. Available at http://www.cfo.com/article.cfm/12625195

Journal of Accountancy. 2009. CPA Exam to Undergo Transformation. Available at

http://www.journalofaccountancy.com/Web/20092194.htm

14
Kroll, Karen. 2009. Is it U.S. GAAP IFRS at U.S. universities? Financial Executive. Available at

http://www.allbusiness.com/education-training/education-systems-institutions/12386671-1.html

PricewaterhouseCoopers. 2010. IFRS Ready. Available at http://www.pwc.com/us/en/faculty-

resource/ifrs-ready.jhtml

Oracle Corporation. 2008. Managing the Transition to International Financial Reporting Stan-

dards. Available at: http://www.oracle.com/appserver/business-intelligence/hyperion-financial-

performance-management/docs/manage-transition-to-ifrs-whitepaper.pdf

Piper, Arthur. 2005. A Matter of Principles. The Internal Auditor. Vol. 62, Iss. 5 (Oct): 62-68.

Rezaee, Z; Smith, M; and Szendi, Z. 2010. Convergence in Accounting Standards: Insights from

Academicians and Practitioners (forthcoming).

Smith, L. 2008. Are International Financial Reporting Standards (IFRS) an Unstoppable Jugger-

naut for US and Global Financial Reporting? The Business Review, Cam-

bridge 10, no. 1, (July 1): 25-31.

15
 Tables and Panels

Panel A: Sample (64 Observations) and Background Data

Gender Classification (%) Professionals

Male 31 Junior 9 Accountant 14
Female 33 Senior 14 CPA 1
PhD Student 1 Financial Analyst 3
Other 16
Professor Length of experience Industry%
Adjunct Professor 2 Mini 0 3 Construction 2
Assistant Professor Max 30 4 Manufacturing 1
Associate Professor 1 Average 5.39 5 TransportationCommunications, Electric, Gas, Sanitation 7
Professor 1 SD 7.7 6 Wholesale Trade 3
7 Retail Trade 3
8 Finance, Insurance & Real Estate 10
9 Services 9
10 Public Administration 8

Panel B: Familiarity with IFRS

Academics Practitioners
t-test
Mean Standard Mean Standard significance
Response Deviation Response Deviation

Please indicate the extent to which

you are familiar with IFRS (1 = not 2.43 1.260 2.40 1.193 .008
familiar; 5 = very familiar).

T-test, significant at 0.05 level. *

T-test, significant at 0.01 level. **

Panel C: Readiness for IFRS

Academics Practitioners
t-test
Mean Standard Mean Standard significance
Response Deviation Response Deviation

Please indicate the extent to which

you think auditors, accountants, and
accounting students are ready for the 3.04 1.201 2.89 .923 .257
convergence to IFRS (1 = not ready;
5 = very ready).

16
 T-test, significant at 0.05 level. *
T-test, significant at 0.01 level. **

Table (1)

2. Please indicate the extent of severity of the following in a move toward complete convergence
to IFRS by circling the appropriate number (1 = not severe; 5 = severe; NA = no opinion).

Academics Practitioners

Mean Standard Mean Standard F-test

Response Deviation Response Deviation significance

1. Initial cost of convergence 3.36 1.420 2.89 1.623 1.465

2. Required changes in auditing standards 3.68 1.335 3.09 1.463 2.760

3. Perceived uncertainties surrounding IFRS 3.11 1.370 3.09 1.422 .004

4. Lack of sufficient involvement of global regulators

3.07 1.274 3.31 1.451 .485
in the IASB standard-setting process

5. Transition plan and issues pertaining to IFRS 3.18 1.156 3.37 1.330 .367

6. Lack of education, understanding, and experience by

3.57 1.574 3.57 1.481 .000
preparers of financial reports with the use of IFRS

7. Lack of coverage of IFRS in financial accounting

3.57 1.501 3.40 1.479 .206
textbooks

8. Lack of coverage of International Standards on

3.61 1.474 3.49 1.422 .110
Auditing (ISAs) in auditing textbooks

T-test, significant at 0.05 level. *

T-test, significant at 0.01 level. **

17
 Table (2)

Academics Practitioners

Mean Standard Mean Standard t-test

Response Deviation Response Deviation significance

1. Minimize barriers to global competition for capital 3.54 1.666 3.80 1.410 .465

2. Increase global comparability promoting a more

3.54 1.815 4.14 1.089 2.706
informed global marketplace

3. Position IFRS to be the globally accepted

3.46 1.795 3.74 1.336 .499
accounting language

4. IFRS enable management and auditors to exercise

3.11 1.685 3.54 1.379 1.274
more professional judgment

5. IFRS create uniformity in global financial reporting

3.12 1.903 4.31 1.078 9.771***
including audit reports

Questionnaire Section 4

a. IFRS training for investors .61 .497 .51 .507 .531

b. IFRS training for auditors .79 .418 .74 .443 .153

d. IFRS training for management .82 .390 .71 .458 .968

e. IFRS education in the accounting curriculum .79 .418 .86 .355 .538

T-test, significant at 0.05 level. *

T-test, significant at 0.01 level. **
Table (3)

Comparison of Responses between Those Familiar with IFRS and Those Not Familiar

Not Familiar Familiar

t-test
Mean Standard Mean Standard significance
Response Deviation Response Deviation

Questionnaire Section 1

2. The extent to which you auditors, accoun- 2.97 1.066 3.27 1.335 .668
tants, and accounting students are ready for

18
the convergence to IFRS
Questionnaire Section 2

1. Initial cost of convergence 3.03 1.586 3.87 .915 3.526*

2. Required changes in auditing standards 3.17 1.555 4.00 .845 3.725*

3. Perceived uncertainties surrounding IFRS 3.03 1.520 3.53 .915 1.366

4. Lack of sufficient involvement of global

regulators in the IASB standard-setting 2.97 1.497 3.60 .828 2.313
process
5. Transition plan and issues pertaining to 3.27 1.388 3.60 .828 .730
IFRS
6. Lack of education, understanding, and ex-
perience by preparers of financial reports 3.50 1.614 3.87 1.302 .583
with the use of IFRS
7. Lack of coverage of IFRS in financial ac- 3.57 1.524 3.60 1.454 .005
counting textbooks
8. Lack of coverage of International Stan-
dards on Auditing (ISAs) in auditing text- .088
3.53 1.432 3.67 1.397
books
Questionnaire Section 3

1. Minimize barriers to global competition 3.87 1.408 3.60 1.454 .351

for capital
2. Increase global comparability promoting a 3.83 1.510 4.33 .816 1.424
more informed global marketplace
3. Position IFRS to be the globally accepted 3.30 1.664 4.13 1.125 3.046*
accounting language
4. IFRS enable management and auditors to 3.27 1.660 3.27 1.223 .000
exercise more professional judgment
5. IFRS create uniformity in global financial 3.70 1.643 4.30 1.222 1.560
reporting including audit reports
Questionnaire Section 4

a. IFRS training for investors .50 .509 .80 .414 3.909*

b. IFRS training for auditors .73 .450 .87 .352 1.006

d. IFRS training for management .73 .450 .73 .458 .000

e. IFRS education in the accounting curricu- .73 .450 .93 .258 2.529
lum
T-test, significant at 0.05 level. *
T-test, significant at 0.01 level. **

19
 Appendix A

FINANCIAL REPORTING CONVERGENCE QUESTIONNAIRE

Several countries worldwide have recently adopted International Financial Reporting

Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The
United States of America is strongly considering adopting IFRS by 2015. This
questionnaire is intended to examine the relevance and applicability of IFRS as a global
single set of financial reporting standards. Your input is greatly appreciated.

Demographics - Please check the appropriate category:

Gender: Male ( ), Female ( )

Occupation:
Freshman ( ) Senior ( )
sophomore ( ) Graduate/Master ( )
junior ( ) PhD Student ( )

Student

Adjunct Professor ( ) Associate Professor ( )

Assistant Professor ( ) Professor ( )
Professor:

Professional: Accountant ( ), CPA ( ), Financial Analyst ( )

If other, please state here: ____________________________

Years of Work Experience: ____ Years

Education:
Less Than High School ( ) 4-Year College Degree (BA, BS) ( )
High School/GED ( ) Masters Degree ( )
Some College ( ) Doctoral Degree ( )
2-Year College Degree Associate ( ) Professional Degree (MD, JD) ( )

Industry Classification (SIC) (Please Circle one):

A. Agriculture, Forestry & Fishing E. Transportation, H. Finance, Insurance & Real

B. Mining Communications, Electric, Gas, Estate
C. Construction Sanitation I. Services
D. Manufacturing F. Wholesale Trade J. Public Administration
G. Retail Trade

1. Please indicate the extent to which you are familiar with International Financial
Reporting Standards (IFRS) by circling the appropriate response (1 = not familiar; 5 =

20
very familiar).

Not Neither Very

Familiar Familiar Familiar
nor
Unfamilia
r

1 2 3 4 5

1. Please indicate the extent to which you think auditors, accountants, and accounting
students are ready for the convergence to International Financial Reporting Standards
(IFRS) by circling the appropriate response (1 = not ready; 5 = very ready).

Not Ready Neither Very

Ready nor Ready
not Ready

1 2 3 4 5

2. Please indicate the extent of severity of the following in a move toward complete
convergence to IFRS by circling the appropriate number (1 = not severe; 5 = severe; NA =
no opinion).

Not Neutral Very No

Severe Severe Opinion

1. Initial cost of convergence 1 2 3 4 5 NA

2. Required changes in auditing standards 1 2 3 4 5 NA

3. Perceived uncertainties surrounding IFRS 1 2 3 4 5 NA

4. Lack of sufficient involvement of global

1 2 3 4 5 NA
regulators in the IASB standard-setting process

5. Transition plan and issues pertaining to IFRS 1 2 3 4 5 NA

21
6. Lack of education, understanding, and
experience by preparers of financial reports with 1 2 3 4 5 NA
the use of IFRS

7. Lack of coverage of IFRS in financial

1 2 3 4 5 NA
accounting textbooks

8. Lack of coverage of International Standards on

1 2 3 4 5 NA
Auditing (ISAs) in auditing textbooks

5. Please rank the importance of the perceived benefits of convergence to IFRS as a single
set of accounting standards by circling the appropriate number (1 = least important; 5 =
most important; NA = no opinion).

Least Most No
Important Important Opinion

1. Minimize barriers to global competition

1 2 3 4 5 NA
for capital

2. Increase global comparability promoting

1 2 3 4 5 NA
a more informed global marketplace

3. Position IFRS to be the globally accepted

1 2 3 4 5 NA
accounting language

4. IFRS enable management and auditors to

1 2 3 4 5 NA
exercise more professional judgment

5. IFRS create uniformity in global financial

1 2 3 4 5 NA
reporting including audit reports

6. A proper plan to transition all U.S. companies to IFRS requires adjustments to (check all
that apply):

___ a. IFRS training for investors ___ d. IFRS training for management

___ b. IFRS training for auditors ___ e. IFRS education in the accounting
curriculum

22
7. What do you think is the single most important reason that the US should switch from
US GAAP to IFRS?

8. What do you think is the single most important reason that the US should NOT switch
from US GAAP to IFRS?

9. Please provide any additional observations or comments below:

THANK YOU for participating in this study.

23