In my previous posting, I talked about progress in the US towards acceptance of IFRS as a primary reporting framework. I referred to hints that we might see an announcement from the SEC on this matter by 21 September. Well it seems that the ball is not just rolling but gathering pace as last week the SEC voted unanimously to seek public comments on a release that will include both (1) a proposed roadmap for the potential mandatory adoption of IFRS in the US from 2014 and (2) a proposed rule that would allow the optional use of IFRS by certain companies as early as 2009.
But it is not quite as simple as it sounds (see webcast details below to find out more). In short, the proposed roadmap for mandatory adoption sets out several milestones that would need to be achieved prior to the SEC accepting IFRS. These are:
• Continued improvements to IFRS.
• Accountability and independent funding of the International Accounting Standards Committee Foundation.
• Enhanced ability for interactive data (XBRL) to accept IFRS information.
• Sufficient progress in IFRS education and training in the US.
And early adoption would not be an option for every company. The proposed rule would restrict optional use of IFRS to US companies that are among the 20 largest companies in their industry group globally, and only then if more of those 20 largest companies report under IFRS than any other GAAP. Furthermore, the SEC will seek comment on two disclosure alternatives for companies electing to adopt IFRS early:
• Option A: Companies provide the disclosures required by IFRS 1, First-time Adoption of International Financial Reporting Standards, and include a one-time reconciliation of net income and equity from IFRS to US GAAP in their first set of IFRS financial statements.
• Option B: Companies go beyond the requirements of IFRS and include ongoing unaudited reconciliations from IFRS to US GAAP.
If you are interested in hearing more about the SEC announcement, my US colleagues will be presenting a webcast this Thursday (4 September) - details can be found here.
In addition, you can continue to track developments on the US IFRS website. I would be interested in your thoughts, either by commenting here or by email.
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