In 2008, the Securities and Exchange Commission (SEC) issued their proposed roadmap to convergence with international standards. The roadmap called for large accelerated filers to adopt international financial reporting standards (IFRS) by 2014. Small accelerated filers and non-accelerated filers would adopt IFRS in 2015 and 2016, respectively.
The SEC has since replaced their roadmap with their Work Plan. The SEC’s Work Plan clearly indicates that the IFRS will not be adopted any earlier than 2015.
The primary reason for the delay is the time required to fully implement IFRS. The American Institute of Certified Public Accountants (AICPA) conducted a survey in which respondents indicated that they were in favor of adopting international standards, but they would need four to five years to transition from U.S. GAAP to IFRS.
The Work Plan focuses on the following areas:
- Sufficient development and application of IFRS for the U.S. domestic reporting system;
- The independence of standard setting for the benefit of investors;
- Investor understanding and education regarding IFRS;
- Examination of the U.S. regulatory environment that would be affected by a change in accounting standards;
- The impact on issuers, both large and small, including changes to accounting systems, changes to contractual arrangements, corporate governance considerations, and litigation contingencies; and
- Human capital readiness.
In a progress report released by the SEC in late October, they noted that there are two implementation methods which the SEC is currently considering. The first of these methods would be Convergence, in which a country fully adopts IFRS. The second of the two would be Endorsement, in which a country incorporates IFRS into their current standards. China is one such example of the former and Europe and Australia are examples of the latter.
If you have any questions on how your organization can gear itself for these changes, please contact Todd Lucas at firstname.lastname@example.org.
Schneider Downs provides accounting, tax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH.
This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.