The Securities and Exchange Commission has affirmed its support for a single set of global accounting standards and says its staff will put together a work plan examining the issues involved in adopting International Financial Reporting Standards (IFRS) in the U.S.
In a statement issued Wednesday, the SEC also said it will decide next year whether to adopt IFRS for U.S. financial reporting. That 2011 date is the timeframe originally set for that decision in the roadmap the agency issued in 2008 under former chairman Christopher Cox.
Over the last year, as Mary Schapiro succeeded Cox as the agency's chairman, there have been some doubts about the SEC's commitment to IFRS, says D.J. Gannon, leader of Deloitte's IFRS Center of Excellence. "This action actually puts this commission on record as supporting the notion of a single global standard."
The SEC's 2008 roadmap had elicited many comment letters from finance executives expressing concern about how much time companies would be given to prepare for a switch to IFRS. In response to those concerns, the SEC said in its statement that "if the Commission determines in 2011 to incorporate IFRS into the U.S. financial reporting system, the first time that U.S. companies would report under such a system would be no earlier than 2015."
Gannon says the work plan that the commission asked its staff to produce will provide a lot of specifics that have been missing to date. "The plan will be addressing what it's going to take to educate the U.S. populace on IFRS, what it's going to mean for companies, for taxes, for broader regulatory reporting," he says.
The SEC statement suggests that agency's decision next year on whether to on adopt IFRS will depend in part on the progress made on converging U.S. generally accepted accounting principles (GAAP) and IFRS.
Gannon notes that the Financial Accounting Standards Board and the International Accounting Standards Board are currently working on convergence projects involving a number of different accounting topics.
"Clearly there's a lot of work, and we're talking about some pretty significant changes," he says. "What the commission said, which is consistent with what the G-20 has been saying, is these convergence efforts need to continue and they need to be completed sometime next year."