IFRS to hit LIFO companies

We've noted the transition to IFRS from U.S. GAAP will likely have a lot of unforeseen consequences, not unlike Sarbanes-Oxley. Compliance Week takes a look at one issue: How IFRS adoption would change accounting for inventory, given that IFRS prohibits the last-in-first-out (LIFO) method.

A study of 30 large companies found that the impact is potentially profound. "If they lose the tax benefit of using LIFO, all the benefit they've ever gotten from using LIFO is going to come back to bite them. All the benefit that a company has ever gotten from using LIFO comes undone essentially all at once," notes one expert. This is but one of many issues. One partner in Grant Thornton tells Compliance Week, "It will make the Sarbanes-Oxley issues seem minor in comparison." I maintain that some Sarbanes-Oxley controls will have to be re-examined.

For more:
- here's the Compliance Week article

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