In its first formal action on IFRS since Chairman Mary Schapiro took office, the SEC plans to consider its policy on the use of IFRS by U.S. issuers at an open meeting Wednesday.
The SEC, under former Chairman Christopher Cox, published in November 2008 a proposed road map for the adoption of IFRS. The proposal outlined a plan that would require the largest U.S. companies to file IFRS reports for fiscal years beginning on or after Dec. 15, 2014, provided certain milestones (including—but not limited to—improvements in accounting standards) had been met by 2011.
During her confirmation hearings, Schapiro appeared to be skeptical of the proposed road map when she highlighted concerns about a lack of consistency in the application of IFRS, the cost for U.S. companies to switch to IFRS from U.S. GAAP, and the independence of the International Accounting Standards Board (see “SEC Nominee Pledges to Revitalize Enforcement, Has Concerns About IFRS”).
Once in office, she first spoke publicly on the issue in September when she and recently appointed Chief Accountant James Kroeker said separately that they would make the road map proposal a priority in the fall. But fall passed without any guidance from the SEC.
Many issuers have been anxiously awaiting a “date certain” for the adoption of IFRS. However, it’s uncertain whether the statement the SEC will consider Wednesday will include a specific date. The 2008 road map proposal did not call for the SEC to make a final decision on whether to adopt IFRS until 2011. Many stakeholders who commented on the proposal said the road map would not give them enough time to transition to the new standards if the SEC does not reach a decision until 2011. Many also cited concern over the cost of moving to the new standard.
Another key issue is the progress of the convergence project undertaken by FASB and the IASB under which the two standard-setting boards have agreed to merge their separate sets of standards into a single high quality set. Under the agreement, the boards are taking the best approach from either U.S. GAAP or IFRS or jointly developing entirely new standards where the current standards of neither body are deemed to be of sufficient quality.
FASB and the IASB have been working on this convergence process since 2002 with many major joint standard-setting projects scheduled for completion by June 2011.
The June 2011 completion date also corresponds with a September request by the leaders of the G-20 nations for “international accounting bodies to redouble their efforts to achieve a single set of high-quality, global accounting standards within the context of their independent standard setting process and complete their convergence project by June 2011.”
The September statement by the G-20 leaders in Pittsburgh followed previous statements calling for a single set of global accounting standards and other accounting changes at summits held in Washington in November 2008 and in London in April 2009.
To view a live Webcast of the SEC’s open meeting at 10 a.m. ET Wednesday, click here. Also follow the JofA’s live coverage on Twitter ( AICPA_JofA ) and Facebook ( Facebook.com/JournalofAccountancy ).
G. Lamoreaux (firstname.lastname@example.org) is a