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IFRS Delay Helps Some Companies

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By Michael Cohn
April 27, 2010

The uncertain state of U.S. adoption of International Financial Reporting Standards could be helping a number of companies by giving them extra time to make the adjustment.

That was one of the points raised during a discussion of global accounting standards on Tuesday hosted by Pace University’s Lubin School of Business in New York. The Securities and Exchange Commission recently ruled that IFRS won’t be incorporated into U.S. financial standards until 2015 at the earliest, depending on a decision next year on whether to go forward with the transition. 

“We know we have time between now and when the SEC mandates it,” said IBM director of IFRS policy and implementation Aaron Anderson. “We can do a brisk walk instead of a sprint.”

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John McGinniss, executive vice president and chief accounting officer at HSBC North America Holdings, said the delay could benefit smaller community banks.

Several of the speakers disputed the notion that IFRS is more principles based than U.S. GAAP. “U.S. GAAP is founded upon principles,” said SEC Chief Accountant James L. Kroeker. “That’s what the P is supposed to stand for.” However, he noted that principles-based regulations “don’t work if the people behind them aren’t principled.”

Tom Jones, director of Lubin’s Center for the Study of International Accounting Standards, believes that adoption of IFRS is inevitable, and he sees limitations in the convergence process of U.S. GAAP with IFRS. “You can’t converge 17,000 pages with 2,000 pages,” he said. “You have to adopt at some point.”

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