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SEC statement regarding IFRS roadmap Resources Global Professionals Finance & Accounting Blog Wednesday, February 24. 2010 SEC statement regarding IFRS roadmap Earlier today, the SEC held a public meeting to discuss the current roadmap proposal to move to IFRS in the US. The SEC released a preliminary plan which would require US-listed companies to report under international accounting rules no earlier than 2015. (The previous roadmap had an 2014 effective date - with a voluntary option). LIke the previous proposal, the SEC will not make a final determination on the path to IFRS until 2011. This is consistent with the G20 request for the FASB and the IASB to converge accounting standards in some important areas such as financial instruments, fair value, financial statement presentation, revenue recognition, consolidations, etc. by June of 2011. Between now and 2011, the SEC will investigate whether international standards are sufficiently developed, consistent with the U.S. reporting system and the independence of the IASB. It will also look into whether there is sufficient education regarding IFRS for preparers, auditors users, etc. Other issues include determining the potential impact on US laws or regulations, including tax and regulatory reporting. Other areas of concern are the impact to accounting systems, existing contractual agreements, corporate governance, etc. The SEC staff is expected to begin to execute the work plan for IFRS no later than October 2010.
While today's statement appears to have been a bit of a "non-statement" - the SEC effectively reiterated that they won't make any decision until 2011 - the gameplan and the roadmap is now "owned" by the current group of SEC commissioners. The previous roadmap was issued under SEC Chair Christopher Cox. This reaffirmation - issued under current SEC Chair Mary Shapiro - effectively becomes hers. This was an important step towards moving the issue forward. Other countries that have made decisions to move to IFRS under the expectation that the SEC would also make such a move are likely a bit disappointed with today's announcement. Posted by Colleen Cunningham at 08:52 | Comment (1) | Trackbacks (0)
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The news from the SEC yesterday was not earth shattering, it was still a commitment by the Shapiro administration to the converging of US GAAP and IFRS that was originally the SEC proposed in November 2008, with a slight modification. The original SEC roadmap, there was a timeline of 2011 to make the IFRS transitioning determination. This date, although not concrete, has not changed. The milestones set out in the original plan are for the most not changed. What did change is that the mandatory implementation date for accelerated filers has been pushed back one year from 2014 to 2015. This should not be a surprise because of a couple of reasons. The change in administration, the economic crisis, and the overwhelming comment letters stating that companies will need more time.
I have always believed that this process is more about converging standards than adopting IFRS. The original goal set out between the FASB and the IASB in the Norwalk Agreement was toward convergence of IFRS and U.S. GAAP, not the adoption of IFRS. The convergence of standards has been put on a fast track because of calls from the G20 and this can be seen on the IASB project page. Many of the joint projects are set for converged standards by 2011.
The SEC established a work plan team that will issue itâ??s first report by October 2010. This will be the group to keep an eye on this coming year because they will be the pulse of when a â??date certainâ? is set.
I do believe that we will ultimately have one set of high quality, country-neutral standards that will be used globally, including the U.S., in the next 3 - 5 years. It will just take a little longer than many wish.
However, that doesnâ??t mean that we should put off the process of IFRS education until the â??date certainâ? has been set. During this time, we as CPAâ??s need to become bi-lingual because we will be dealing with IFRS sooner than we think. For example, a German company gains â??controlâ? of a US company and the U.S. company has to consolidate itâ??s financials into the German parent company. The U.S. company will have to adopt the same accounting policies (IFRS) as its parent. This adoption is usually done in a very short time frame. This situation is happening more and more today.
What if this happens to your client and you donâ??t have the knowledge to assist them in their transition to IFRS? That client will find a firm who has the knowledge and expertise. Or think about the other side of this situation. You could begin to develop a new line of business in IFRS consulting so you can be the firm that new client seeks.