What’s the Future of IFRS in the U.S.?
A couple of weeks ago at the AICPA National Conference on Current SEC and PCAOB Developments in Washington, D.C., James Kroeker, chief accountant at the Securities and Exchange Commission, provided an update on the status of the SEC’s decision on whether and how to incorporate International Financial Reporting Standards into the U.S. financial reporting system for public companies. If you were hoping for the SEC to provide a definitive timeline, then you’re not going to be happy. Kroeker stated that the SEC is still at least a few months away from a decision. Previously the SEC had stated that a decision could be expected in 2011. However, SEC staff are still writing a final report on IFRS that will help guide the SEC’s decision and, presumably, a timetable for incorporation of IFRS in the U.S.
Since the SEC staff first floated the “condorsement” approach at last year’s AICPA National Conference on Current SEC and PCAOB Developments, any conversation about outright adoption of IFRS in the U.S. seems to have ceased. Nevertheless, the AICPA urged the SEC to give U.S. issuers the option to adopt IFRS as issued by the International Accounting Standards Board.
What condorsement should look like is also controversial. The AICPA essentially asked for quick endorsement of IFRS by the Financial Accounting Standards Board under the condorsement approach. The Financial Accounting Foundation, in contrast, issued a comment letter in November to the SEC stating, among other things, that the floated condorsement approach would diminish the SEC’s ability to ensure investor protection in the U.S. capital markets. Instead, the FAF proposed a more FASB-centric approach based on a common set of international standards.
So when is the SEC going to announce a decision? The short answer is that we don’t know. As it stands, the G-20 is set to meet again in April 2012 and has called for an update on global financial reporting standards at that time. So there is a good chance that, if we have not heard a decision from the SEC by that time, we will hear more about IFRS in the U.S. from Treasury Secretary Timothy Geithner.
I’m hoping for a decision and a date-certain in the first half of 2012. Others, however, think it is sounding more and more like 2013 before we even know if IFRS will be incorporated in the U.S., let alone when.
What’s your best guess? When will the U.S. announce its decision and a timetable?
Fred Gill, CPA, Senior Technical Manager, American Institute of CPAs.