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A perfect storm is described as a rare combination of a number of circumstances that are responsible of aggravating a situation drastically. According to William O’Brien, financial reporting for both the public as well as non-public companies are expected to be altered dramatically with the coming of the three events which constitute a perfect storm in business. These events are adoption of international Financial Standards (IFRS) by the public companies, major GAAP introduction for the private companies and the reformatting of each individual’s financial statements.

The Securities and Exchange Commission (SEC) shocked  the financial world in November 2007 by their announcement of acceptance of IFRS based financial statements towards the foreign registrants. The commission further attested that it would explore the adoption of IFRS by the domestic companies. SEC further generated road map towards the adoption of IFRS the following year. An early implementation option together with a general transition date in 2014 was also included in the road map. At that time, only few companies responded towards this move. It was after two months extension that the events were perceived to be moving too fast. At the same time, businesses began to realize that there was more than a simple change which was taking place in the accounting standards. SEC also realized this change and went further to update their timetable to the year 2010. This also interfered with where the anticipated transition was then set tentatively for 2015 (O’Brien 3).

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As more and more efforts were put forward towards IFRS adoption, a new issue came out. This was the accounting standards for both small as well as the medium sized enterprises (SMEs). A new standard on IFRS for the small medium-sized enterprises was eagerly being awaited by the IFRS users at this time. It never took long, and in July 2009 the standard was issued by the International Accounting Standards Board. With these standards, small businesses were now to comply with a number of complex aspects, which were associated with full IFRS adoption. Then AICPA prepared an implementation, after they recognized the importance of this standard to the private companies based in the United States. After further review of the standard with the senior members of the council, Blue Ribbon Panel was created by the institute, its mandate was to have further access to the private company’s financial reporting’s in the United States (O’Brien 4).

This panel under the leadership of Rick Anderson considered a variety of all reporting options available for a private company. As a recommended alternative, it went further to drop the use of IFRS for the SMEs. Earlier in the year, in order to establish a separate board with the mandate of identifying private company exceptions, as well as modifications to GAAP, Financial Accounting Foundation (FAF) was proposed. At this point, a five-person board was expected to report to the FAF. It also had the mandate of focusing on creating a number of financial reports with the use of lenders, as well as other private company stakeholders. The FAF has further established a working group which its mandate is to be able to evaluate the adequacy possessed in the Financial Accounting Standards Board (FASB) effort in setting the standards for the private company as well as the nonprofit sector.

According to William F. O’Brien, in the wake of 2008, as part of convergence project FASB went further to publish its proposal for changes which were contained in the form as well as the content of traditional financial statements (O’Brien 4). In July 2010, a detailed staff draft of an exposure was presented; this draft was an update from the original proposal. A great interest built up, and it became quite clear that the world was likely to experience some sought of change with regard to financial reporting, which was under both the GAAP and IFRS. At this time, the balance sheet was finally adopted as the statement of financial position and the income statement was considered to be comprehensive income as well as the statement of cash flows which led to abandoning of an indirect method associated with the operation of cash.

As an aspiring accountant, these perfect storms present a number of challenges in the field of accounting, which one should be prepared to face in order to advance in  accountant’s profession. As an aspiring accountant, one needs to look critically at these perfect storm elements and be able to establish the one which might present challenges to him or her during  practices. This will help one, especially while in college, to prepare well prior to starting the experience. With the occurrence of these perfect storms, the number of experts in IFRS, SME reporting as well as convergence is expected to increase. Therefore, as an aspiring accountant a person should have experience as well as skills in these elements of the perfect storm (O’Brien 5).

As a college student, while looking for an internship with an audit company, one is supposed to seek for an internship in those audit firms which will give him/her the opportunity to be able to assess how the storm impacts  a business. This will provide an  opportunity to be able to gain knowledge as well as skills in regard to these storms. One should also be able to seek for internship from one company to another while going on with the learning. This will help one to be able to review a number of plans being implemented from one company to another since these storms are dynamic and might suddenly change companies/ organizations (O’Brien 6).

As a senior student at SJSU, one should always stay current while updating himself on a number of issues being reported concerning the perfect storms. In order to improve one’s competencies on matters relating to the perfect storm, one should also set a personal commitment of having a continuous education not only on the factors of the perfect storm, but also in areas which are substantially impacted by the storm. Also, one should always be on the look out, especially when on internship and be able to note when the storm clouds gather closer towards the organization and be quick to note the effects caused by the storm. This way, one will  build his/her experience as well as skills towards the elements of the perfect storm (O’Brien 8).

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