IFRS not OCBOA

Back in May of 2008, the Governing Council of the AICPA voted to designate the International Accounting Standards Board (IASB) in London as an accounting body for purposes of establishing international financial accounting and reporting principles. What this means is that AICPA members have the option to use International Financial Reporting Standards (IFRS) as an alternative to U.S. generally accepted accounting principles.

Under Rule 202, a member who performs professional services shall comply with the standards promulgated by the designated bodies. Additionally, a member may not say that financial statements are in accordance with generally accepted accounting principles unless they follow the standards promulgated by a standard setter listed in Appendix A of Rule 203.

The list of designated accounting bodies includes the Financial Accounting Standards Board (FASB), the Governmental Standards Accounting Board (GASB), the Federal Accounting Standards Advisory Board (FASAB), and the IASB.

There have been questions as to whether IFRS and IFRS for Small and Medium Entities (IFRS for SMEs) fall under “other comprehensive basis of accounting” or OCBOA. The answer is that they do not. IFRS and IFRS for SMEs are GAAP.

More information on financial statements prepared on a comprehensive basis of accounting other than GAAP is found in AU Section 623 Special Reports. It includes income tax basis, cash basis, and modified cash basis among others.

CPAs may need to check with their state boards of accountancy to determine the status of reporting on financial statements prepared in accordance with IFRS or IFRS for SMEs within their individual state.

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