The SEC staff had its say on IFRS in July. Three months later, the IFRS Foundation provided its own analysis, concluding in October that the obstacles to implementation of IFRS in the United States can be overcome.
The IFRS Foundation released a detailed, 84-page response to the SEC’s exhaustive, 127-page report on IFRS, which was released in July.
The SEC’s report outlined concerns it had about the funding of the International Accounting Standards Board (IASB), the timeliness of responses to widespread accounting issues by the IFRS Interpretations Committee, and other issues.
The IFRS Foundation, in its report, said some of those problems are being addressed in current initiatives. The IFRS Foundation also contested the SEC’s arguments on funding, saying the United States’s contributions are lacking in proportion to the size of its economy and its number of representatives in IFRS Foundation bodies.
What’s unclear is whether the IFRS Foundation report will make a difference in the SEC’s ultimate decision on whether to allow or mandate that U.S. public companies use IFRS for their financial reporting. The SEC declined to comment on the report, and the issue of IFRS adoption in the United States remains in the hands of SEC commissioners with no known timetable.
The IFRS report was released a day after AICPA President and CEO Barry Melancon, during a speech to the AICPA governing Council, warned that the United States could face consequences for not pushing steadily forward on convergence and adopting IFRS.
Michel Prada, chairman of the IFRS Foundation trustees, said in a statement that the United States is well-placed to achieve a successful transition to IFRS.
“While acknowledging the challenges, the analysis conducted by the IFRS Foundation staff shows that there are no insurmountable obstacles for adoption of IFRSs by the United States,” Prada said.
The IFRS (tinyurl.com/8wez2x3) and SEC (tinyurl.com/6pjt6tf) reports are available online.
One of the SEC’s concerns—greater engagement by the IASB with national standard setters and regional bodies devoted to accounting standards—–could be addressed by the IASB’s proposed creation of a 12-member forum.
In an Invitation to Comment (ITC), the IASB proposed that the Americas, Asia- Oceania and Europe should each get three automatic seats on the forum, which would provide the IASB with technical advice and feedback. The body would be known as the Accounting Standards Advisory Forum (ASAF).
Africa would get one automatic seat, and the remaining two seats would be at-large.
The ASAF is being created to facilitate a more streamlined and effective dialogue between the IASB and the standard-setting community. The ITC is available at tinyurl.com/cf9fp5s. Comments were due Dec. 17.