CFA CFA Level 1 IFRS or US GAAP?

IFRS or US GAAP?

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    • tingwuwang
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      Hi guys,

      I was just wondering for those Level 1 veterans out there, if the exams expects us to utilize BOTH financial reporting rules (i.e. under US GAAP or IFRS) or focus solely on either one?

      Thanks for the time reading this!

    • Sophie Macon
      Keymaster
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      You’d learn both and be expected to know both when needed @tingwuwang

    • maboi_1da
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      @sophie if the question does not state should I assume IFRS

    • hairyfairy
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      @tingwuwang‌ from my experience they will always state IFRS or US GAAP methodology. You’ll have to know both, especially differences between the two: questions tend to focus on stuff like this!

    • tingwuwang
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      @hairyfairy ahh thanks so much! it’s just a little weird, cos the accounting i did in uni was based solely on IFRS, thought the CFAs would also have a preference as well…

    • policedog
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      @tingwuwang‌ as the CFA is international they have to account for both IFRS and US GAAP I suppose.

      Pun not intended. 🙂

    • simply_complex2
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      @tingwuwang, im in the opposite situation. the accounting i learned was all U.S. GAAP and barely scraped IFRS…then again I’m from the U.S. and our text books are clearly self centered :p 

    • Maverick
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      As a CFA and not an accountant, then you would likely be analyzing companies that may report in US GAAP, IFRS or even a regional accounting method. CFAI cannot express a preference as they are not the industry setters nor do they have the regulatory powers to make the entire world conform to a singular standard.
      If the CFAI did not prepare it’s members to know the two accounting methods widely used in much of the developed world, then it would be badly failing its candidates and charterholders, and it would be nothing more than ‘another regionally specialized financial analysis qualification’, not the thorough and globally respected qualification that it is.
      Hopefully this explains why CFAI expect you to know both methods and their differences.

    • hairyfairy
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      Maverick said:
      As a CFA and not an accountant, then you would likely be analyzing companies that may report in US GAAP, IFRS or even a regional accounting method. 

      A very good point. Have an agree. 🙂

    • WesMantooth
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      A quick read on why you should know both as a CFA or an accountant:
      http://www.pwc.com/en_US/us/issues/ifrs-reporting/publications/assets/pwc-ifrs-in-the-us-the-importance-of-being-financially-bilingual.pdf
      Main reasons (from the article) why IFRS is important to know in the US:

      • Cross-border, M&A, and
      capital-raising activities frequently require the use of IFRS

      • Non-US stakeholders in US
      companies demand the use of IFRS

      • Many non-US subsidiaries of
      US multinationals must comply with IFRS reporting requirements

      • US GAAP change continues to
      be influenced by IFRS

      Even though there is no conversion planned for the US to IFRS in the foreseable future, the influence will always be present.

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