mercoledì 2 novembre 2011

Update on SEC IFRS roadmap

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Update on SEC IFRS roadmap Resources Global Professionals Finance & Accounting Blog Wednesday, December 16. 2009 Update on SEC IFRS roadmap After months of radio silence, the SEC started talking about the IFRS roadmap again over the last few months. Initially, they were indicating that something might be coming out this Fall (and Fall ends at 9 a.m. on 12/21/09!), but last week, they pushed that out to early 2010. What do I expect to happen?
I expect that the SEC will continue to discuss the roadmap over the next few months. Despite, the many comment letters to the proposal that asked "set a date already!", I fully expect that the SEC will keep the current uncertainty until 2011. That is the year that many "big ticket" convergence topics that are being worked on by both the IASB and the FASB are expected to be complete. Interestingly, despite the boards statements to "retriple" the efforts to converge, we are beginning to see more areas of divergence, rather than convergence. The Financial Instruments project is an illustration of that. Both boards are addressing, but are headed in different directions, with FASB likely to require more use of fair value than the IASB. My contention is that convergence is elusive. While we have two separate boards voting on standards, with differing governance (FASB only requires a simple 3-2 majority vote and the IASB requires a super-majority vote 9-5 to pass a standard), I don't expect we will ever be fully converged. Most FASB standards issued in the last few years just eked by with a 3-2 vote. The IASB tends to allow for more options and flexibility to get the super majority required to pass a standard. Look at the Business Combinations standards. This was the first completed major convergence project by both boards, and the standards are not identical. To be sure, the accounting for business combinations is much more aligned than before, but differences exist. The major difference related to the full goodwill method. The IASB could not get the votes to pass it - so they allowed an option to use the full goodwill method or the proportionate method.
There is also no longer any incentive for the rest of the world to continue to support this convergence effort. As the funding mechanism for the IASB becomes more stable and dependent on those countries (that is, every county except the US) that use IFRS,


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