IFRS will enable US bank to vie globally ; more than one 100 states in the universe are already utilizing IFRS. This is because more than 60 per centum of investors in US operate foreign stocks with foreign Bankss and other companies which use IFRS. Therefore. if US bank fail to exchange to IFRS. transparence and comparison will cut down for US issuers and investors ( Silver. 2009 ) . Furthermore. US exchanges such as the NYSE have been bit by bit losing their place as the topographic point where worldwide companies list their portions.
This being the instance. the US bank has been affected since foreign investors now prefer puting their wealth in other Bankss where the accounting criterions are non as strict is in the US. To avoid losing investing chances and dawdling behind the current developments in the field of accounting. US bank does hold to exchange to IFRS. Comparing the one-year study of Rabobank with that of Wells Fargo bank shows how IFRS reduces fiscal describing into smaller and less complicated paperss.
The 2009 one-year study of Rabobank were complied in a 61 ( Rabobank. 2010 ) pages document while that of Wells Fargo were documented in 196 pages ( Wells Fargo. 2010 ) . This implies that IFRS summarizes fiscal describing more than thrice of the GAAP accounting criterions. It is besides apparent from the one-year studies of the two Bankss that IFRS provides more comprehensive historical information sing the public presentation of the bank over the past five old ages ( the instance of Rabobank ) while GAAP merely gives the present and old year’s figures.
This makes IFRS more effectual since the stakeholders. direction and investors can be able to track the fiscal place of the bank at a glimpse so that which is really of import for future palming ( IASCF. 2009 ) . Adopting IFRS will do coverage for most Bankss in US easier since it will cut down the complexnesss of comparing fiscal statements from different subordinates across the Earth.
It will besides ease internal consistence and streamline all operations. scrutinizing. coverage criterions. preparation and company criterions ( Articles Base. 2009 ) . For case. Rabobank applies IFRS on its fiscal coverage. This has greatly improved the efficiency of the bank since it operates in more than 40 states around the universe. Following the bank’s one-year studies since 2004. the entire net net income calculated utilizing IFRS was higher by 15 million Euros as compared to the same when calculated with GAAP ( Rabobank Nederland. 2005 ) .
This difference was majorly due to the benefits of reclassifications of involvement income under IFRS. This is because under the IFRS accounting criterions. several involvements are no longer consolidated and this consequences to lesser third-party involvements ( Rabobank Nederland. 2005 ) Disincentives of following IFRS IFRS accounting criterions are less elaborate as compared to GAAP ; GAAP is more complex and based on regulations while IFRS is based on rules.
Adoption of IFRS will cut down the quality of fiscal coverage because most of the regulations applied for GAAP have been let-out in IFRS—while IFRS principles fit in a individual two-inch thick book. GAAP criterions tantrum in a nine-inch midst book—this indicates that the inside informations and describing demands of IFRS are fewer and compressed ( IASCF. 2009 ) . Adoption of IFRS implies that Bankss will incur extra costs: developing staff on IFRS criterions and besides initial transition costs which will be paid to advisers and hearers ( Articles Base. 2009 ) .
Sing the format of the one-year studies of the two Bankss. it is apparent that IFRS eliminates many points from the one-year study and presents merely the amalgamate fiscal place of the bank. Information eliminated from Rabobank’s 2009 fiscal studies include the vision. mission and ends of the organisation. fiscal reappraisals. the study from independent registered public accounting house and studies on stock public presentations ; nevertheless this information is provided in Wells Fargo 2009 one-year study.