International Financial Reporting Standards (IFRS) provides a globally converged accounting framework that individual countries can use in place of their local, generally accepted accounting principles (GAAP). The intent of IFRS is to enhance financial statement comparability across borders, and for that reason is widely used outside the US.

Although the FASB and SEC do not aim to harmonize every new or revised accounting standard, they do look for conceptual alignment when possible. They have identified ASC 718 and IFRS 2 as converged, but this is merely at a theoretical or framework level. There are numerous considerable areas of difference.

This white paper reviews a handful of important questions that US-based companies should weigh in light of IFRS 2. The focus is on the implications US multinational companies face as a result of their subsidiaries needing to comply with IFRS 2 for their statutory accounting, as well as on the many ways IFRS 2 diverges with ASC 718.

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