Bessrawl Memo
MEMORANDUM
TO: The CFO of Bessrawl Corporation
Implementation of the new accounting standards is a complex process and it requires time and effort, however switching to IFRS could be beneficial to your company. In this memo we would like to address the costs and benefits of switching from U.S GAAP to IFRS. We will also analyze the impact that the change would have on Bessrawl’s financial statements.
One of the cons of switching to IFRS is the cost and time. The initial cost to convert to IFRS will be high as the employees need to be retrained on how to prepare financial statements under IFRS standards. The process of implementing new accounting rules takes time and effort, so additional staff might be needed during the transition process. In addition the employees might be resistant to changes.
One of the benefits of switching from U.S. GAAP to IFRS is that it would make easier for the company to cross list. Some of the major foreign stock exchanges require companies to use IFRS to prepare their consolidated financial statements. By switching to IFRS, Bessrawl could list on foreign stock exchange to get more investors and raise more capital. At the same time the investors want transparency and comparability of the financial statements. By switching to IFRS as the only accounting standards, it will allow the investors to easy compare the financial statements among companies. This would reduce the investor’s uncertainty so they would be more willing to invest in Bessrawl.
Another benefit of implementing the use of IFRS is that it will reduce the financial reporting costs in the long run. IFRS is already used in many countries around the world. The U.S.-based multinational companies need to prepare their consolidated financial statements in U.S. GAAP, where most of the foreign financial statements are prepared in accordance with IFRS or local GAAP. The process of consolidation of financial statements could be costly and time consuming. By switching to
TO: The CFO of Bessrawl Corporation
Implementation of the new accounting standards is a complex process and it requires time and effort, however switching to IFRS could be beneficial to your company. In this memo we would like to address the costs and benefits of switching from U.S GAAP to IFRS. We will also analyze the impact that the change would have on Bessrawl’s financial statements.
One of the cons of switching to IFRS is the cost and time. The initial cost to convert to IFRS will be high as the employees need to be retrained on how to prepare financial statements under IFRS standards. The process of implementing new accounting rules takes time and effort, so additional staff might be needed during the transition process. In addition the employees might be resistant to changes.
One of the benefits of switching from U.S. GAAP to IFRS is that it would make easier for the company to cross list. Some of the major foreign stock exchanges require companies to use IFRS to prepare their consolidated financial statements. By switching to IFRS, Bessrawl could list on foreign stock exchange to get more investors and raise more capital. At the same time the investors want transparency and comparability of the financial statements. By switching to IFRS as the only accounting standards, it will allow the investors to easy compare the financial statements among companies. This would reduce the investor’s uncertainty so they would be more willing to invest in Bessrawl.
Another benefit of implementing the use of IFRS is that it will reduce the financial reporting costs in the long run. IFRS is already used in many countries around the world. The U.S.-based multinational companies need to prepare their consolidated financial statements in U.S. GAAP, where most of the foreign financial statements are prepared in accordance with IFRS or local GAAP. The process of consolidation of financial statements could be costly and time consuming. By switching to