Convergence consulting lulls as transition to IFRS remains stalled

New York-Firms waiting for convergence consulting business to pick up will most likely have to wait a little longer - at least until the roadmap for the meshing of U.S. GAAP and International Financial Reporting Standards is approved by the Securities and Exchange Commission, thus prompting companies to accelerate the transition to a single set of global standards.

It's been a disappointing and frustrating situation for many firms - especially since former SEC Chairman Christopher Cox was seen as the regulatory point person in accelerating the adoption of IFRS, and under his auspices, the SEC had unveiled a proposed convergence roadmap complete with adoption dates, under which most public companies would be required to make the switch to IFRS by 2014, with the 20 largest companies transitioning by 2010.

However, since Cox's departure, momentum has slowed under the new commission chair, Mary Schapiro, leaving firms waiting for guidance on how to proceed.

Still, many firms anticipate that change is coming, and are therefore gearing up to assist their clients in answering preliminary questions and transitioning over - a service many see as almost as lucrative as Sarbanes Oxley work, even if requests are few right now.

A majority of clients interested in convergence services are those that have a foreign parent in one of the 113 countries that are already required to file IFRS statements.

"There's going to be a whole lot of opportunities for accounting firms to take advantage of this," said Ken Stephens, one of the lead principals in the SEC practice at Rothstein Kass in Roseland, N.J. "It's almost going to be like what SOX was, although there will be a fall-off after the first year ... . But effectively you're creating a whole business opportunity that hadn't existed in the past."

Still, the expected demand has yet to materialize.

"We anticipated a higher demand for the services this year, but certainly Mary Schapiro has cooled things off a little bit, and I think this is all attributable to the global crisis and the tremendous pressure on the SEC to focus on regulatory issues," said Wayne Kerr, senior consultant at AuditWatch, a brand within the Tax & Accounting business of Thomson Reuters.

Still, Kerr said that he does see a difference between SOX and convergence-related work. The repercussions, he said, are broader, especially if publicly traded companies are required to report under IFRS. The training that goes into that process, he said, is substantial.

"The accountants at the company itself all need to be trained in a new framework, all the auditors do as well, but it's beyond that," he said. "Academics will need training, stakeholders will need training. Under SOX, you could still pick up a set of financial statements and read them, because they hadn't changed. ... With IFRS, people will need help figuring out what they are looking at and how it's different than what they were using before."

• 1
• |
• 2
• |
• 3
• |
• next