CPA Hot Topics 12/23/10 – IFRS v FASB

Garrett Gleim sends CPA candidates bimonthly emails concerning different aspects of the CPA exam. Candidates can see the most recent email and all the archives here on the CPA Candidate Forum.

I hope each and every CPA candidate is enjoying the Holiday season. It is important to find the time during the Holidays to study, even if it is only for a few hours each week. Continually studying and reinforcing the information allows candidates to avoid losing any knowledge they have already gained. Furthermore, CPA candidates should now be preparing for the new 2011 CPA exam, so please make sure you are using 2011 materials. This Hot Topic will address a concern I have heard from some of our Financial Accounting and Reporting candidates.

I have received some emails from customers who are having some difficulty with the integration of IFRSs in our materials. These customers are unsure of when to answer a question according to IFRSs and when to answer according to FASB standards.

According to the AICPA, “International Standards – including International Financial Reporting Standards (IFRSs) – are eligible to be tested. Questions on international standards will begin to be gradually integrated into the examination. Questions on U.S. standards will continue to be part of the examination.” Therefore, you must be aware that not all questions in the Gleim Test Prep and on the actual CPA exam will be testing IFRSs just yet. For our questions, we have added phrases such as “In accordance with IFRSs . . .” and “Under IFRSs . . .” to alert customers to answer those question according to IFRSs. If no phrases such as these are present, the question should be answered based on the FASB standards. We understand based on information from the AICPA that they also will make it obvious which accounting standards to use. Clearly, they have a significant question bank of U.S. GAAP-based questions, so if the question is vague or you are uncertain, you should assume the question is from their traditional test bank and is asking based on U.S. GAAP.

We appreciate that this changeover is quite overwhelming, and that small differences like these can be confusing and stressful; however, you can rest assured that we have taken steps to ensure that you know when IFRSs apply and when they do not. On the exam, you can expect to see similar indications of when to use IFRSs and when to use FASB. Take your time, read each question carefully to search for any indicative information, and then answer the question based on the applicable standards.

It has been our pleasure serving you throughout this year and we look forward to continuing to assist you in furthering your career in the New Year. Be safe this Holiday Season and I’ll be writing to you again in 2011!

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