Doesn’t time fly! It is almost a year since my last posting on the subject of IFRS adoption in the US. You may recall that the SEC had just released for comment its long-awaited proposed roadmap, and moves towards IFRS adoption seemed to be gathering pace.
Around 220 comment letters were received in response to the proposed roadmap. These revealed overwhelming support for a move toward a single set of globally accepted high-quality accounting standards, although views differed on the most suitable approach to get there.
One of the benchmarks established in the proposed roadmap was for continued improvements to IFRS, consistent with the Memorandum of Understanding (MoU). This so-called convergence agenda has had a high profile over the past year, with the G20 leaders, the Financial Crisis Advisory Group and other stakeholders expressing support.
However, the financial crisis has also highlighted differences between current IFRS and US GAAP, as well as differences in views about the best ways in which to resolve them. While the IASB and FASB have repeated their commitment to completing the convergence projects identified in the MoU by 2011, they have recently had difficulty in reaching common views in some areas, such as the use of fair value.
The Boards issued a joint statement last month, once again confirming their commitment to convergence. This was accompanied by a joint statement from the Trustees of the International Accounting Standards Committee Foundation and the Trustees of the Financial Accounting Foundation, the respective oversight bodies of the IASB and the FASB.
The Trustees said they were aware of concerns that differing project timetables for certain projects on each Board’s agenda may pose obstacles in reaching the goal of convergence. But they agreed to interact formally and regularly to monitor the progress and to help resolve issues.
Developments over the past year will no doubt have been of interest to the SEC as it considers what to do next. Notwithstanding the challenges, I remain of the view that the US will ultimately transition. What we don’t yet know is when and how.
The SEC has said that it will increase transparency around IFRS considerations, so there is likely to be more visible activity on IFRS later this year and/or early in 2010. Any final decision on a mandatory adoption date is still anticipated during 2011, or shortly thereafter. In response to preparer concerns, there are indications that the SEC may allow more than the three years proposed in the roadmap to effect a conversion. This means that the start of any mandatory conversion period is likely to extend beyond the original 2014 date.
Once the mandatory conversion timetable is established, I expect the SEC will allow a broader early-adoption option.
No matter what the outcome or timing of the roadmap may be, the ongoing convergence of standards will result in significant changes to both IFRS and US GAAP. This, together with regulatory changes caused by the financial crisis and continued global adoption of IFRS, will result in an extended period of substantial change for which companies should prepare.
As always, I am interested to hear your views, either by commenting here or by email.




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