Time is of the Essence


Time is of the Essence

This passing of this proposal is urgent because of the potential merger of the U.S. Financial Accounting Standards Board with the London-based International Accounting Standards Board and the adoption of International Financial Reporting Standards (IFRS). This had actually been slated for 2014 with strong support of the White House and the SEC, but has now been put off indefinitely, due to pressure from Congress. However, this can change at any time. Not only is it important to pass the proposed solutions of the Cash Flow Method, it is perhaps even more important to make sure that IFRS are never adopted in the United States.

Even if the Cash Flow Method was passed into law, it would likely be nullified by IFRS. More importantly, the merger would hold the United States hostage to a foreign accounting standards board and would cause American businesses to spend billions of dollars to get compliant with the new standards.

In addition, every country has different tax accounting rules, so a one-size-fits-all approach simply cannot work. While this seems obvious, the SEC, along with the White House, was working hard to make this merger a reality. Having global accounting rules for double-entry, balance sheet based financial accounting may make some sense, especially for multi-national corporations. However, what is needed in this regard is a complete separation of tax accounting from financial accounting.