If you are a student preparing to take the CPA exam, it's important to remember that the exam is not solely based on IFRS - you will still need to be competent in the differences between U.S. GAAP and IFRS. In fact, it may give you some measure of comfort to know that the IFRS is more conceptual and general, while the U.S. GAAP is highly specific and detailed.
Why was IFRS placed on the exam? Ultimately, it was decided that new certified public accountants should have a working knowledge of International Financial Reporting Standards upon entering the workforce. Considering that many corporations own or are owned by foreign entities, it is critical that accountants and auditors are capable of dealing with IFRS financial statements.
To ease your mind, general IFRS questions are included in three sections of the CPA exam, including the FAR, BEC, and AUD sections. Here's a quick overview of what you can expect:
- In the FAR section, you may be asked about the differences between preparation of financial statement using IFRS and GAAP standards.
- The AUD section may include questions regarding the differences between U.S. Auditing Standards and ISAs; you will also need to understand the role of the IAASB in establishing International Standards on Auditing.
- The BEC section will include questions regarding globalization and its effects on the business environment. You may be required to give an explanation of transactions and their underlying economic substance.
Ultimately, it is important to keep in mind you are still taking the CPA exam, only now there will be some IFRS thrown into the mix. If you're worried you will have to be an expert, relax - all that is necessary is that you have a general working knowledge of it.
The prospect of taking the exam is stressful enough, without worrying whether you will have to be highly knowledgeable regarding the International Financial Reporting Standards. The fact is the majority of CPA exam courses contain plenty of IFRS information, so you can feel confident that this aspect of the exam won't be a stumbling block to your success.