At a recent Financial Crisis Advisory Group meeting, Financial Accounting Standards Board (FASB) Chair Robert Herz stated that full U.S. GAAP and International Financial Reporting Standards (IFRS) convergence could still be 10 – 15 years away. Chair Herz also noted that when convergence does take place, there will still be many differences between U.S. GAAP and international standards. This comment came on the same day as the SEC’s comment period for a proposed IFRS roadmap closed. The proposed timeline for convergence is 2011, with IFRS being mandatory for all public companies by 2014.
IASB Chair David Tweedie noted that the U.S. could be removed from discussion of convergence if significant process is not made soon. In addition, if convergence does not take place, many will question why it took so long for the U.S. to realize that it will not converge with international standards.
One cause for the delay as stated by Chair Herz, is that convergence is not the primary statutory responsibility of the FASB. With the current economic crisis, and the emergency actions that have been needed, it’s easy to see why the issue of convergence might have taken a back seat.
With over 100 countries currently using IFRS and countries such as China, Canada, Korea and Japan having recently converted or in the process of converting, the United States is one of the few countries left that is not currently following IFRS. When will the United States convert, only time will tell.
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