The American Institute of CPAs and other organizatons expressed their support for the Securities and Exchange Commission's proposed roadmap for moving to international accounting standards.
The Securities and Exchange Commission laid out a proposed roadmap for companies to file financial statements according to International Financial Reporting Standards by 2014 (see SEC Proposes IFRS Roadmap). Companies that are among the top 20 in their industry according to market capitalization would be able to begin filing statements in IFRS for fiscal periods ending after Dec. 15, 2009.
"The AICPA supports one set of high-quality global accounting standards for public companies," said AICPA president and CEO Barry Melancon in a statement. "We believe the capital markets ultimately will insist on IFRS for public companies. Today's action by the SEC continues a robust and thoughtful debate that is critical as the transition occurs."
The AICPA plans to provide its comments on the roadmap. "The SEC has been working on issues relating to IFRS adoption for several years," said Arleen Thomas, senior vice president of member competency and development at the AICPA. "Today's roadmap shows their continued commitment to a robust debate on adoption of IFRS for public reporting purpose. They did a very good job of outlining their goals, the barriers they see and how those barriers can be removed." The institute has set up a Web site, IFRS.com, to provide information to CPA firms on the international standards.
Other organizations and firms also welcomed the move, including the Center for Audit Quality. "The CAQ applauds the SEC for its thoughtful approach to identifying the appropriate path and a reasonable timeline for U.S. adoption of a uniform set of high-quality global accounting standards," said CAQ executive director Cindy Fornelli in a statement. "We realize significant work lies ahead in preparing for a transition, but believe IFRS has proven to be a reputable set of standards for preparing transparent financial information."
Financial Executives International expressed its support as well. "FEI supports the SEC's decision today to propose a roadmap for U.S. issuers for filings of financial statements prepared in accordance with IFRS," said the statement. "FEI maintains that, as companies prepare to move forward with such a significant project, a clear understanding of the end requirements are necessary before companies can develop the necessary systems and procedures to address the critical business issues."
Ernst & Young also welcomed the SEC's move. "Today the U.S. Securities and Exchange Commission took its most significant step toward the adoption of a single set of high-quality global accounting and financial reporting standards that everyone can use," said Ernst & Young chairman and CEO James Turley in a statement. "The dominant language of financial reporting worldwide is fast becoming IFRS and we applaud the commission for approving for public comment a proposed 'roadmap.' Notwithstanding the strength and size of the U.S. capital market, we cannot afford to be left behind." He noted that more than 100 countries already require, permit or base their accounting standards on IFRS.
Danita Ostling, Ernst & Young's technical leader for IFRS, agreed with the SEC's plans as well. "I do believe 2014 is a realistic timeframe," she said. "The date of adoption would be Jan. 1, 2012. That gives us more than three years now. Contrast that to Europe. It's significantly more time than European companies had."
She also pointed out that smaller companies would have even more time to get ready. "The roadmap contemplates mandatory reporting beginning in 2014 for large accelerated filers, 2015 for [smaller] accelerated filers, and 2016 for non-accelerated filers," she said. "Those are the same terms they used in the Section 404 reporting" for Sarbanes-Oxley.
She noted that the SEC will deliberate in 2011 and could back away from the roadmap, although she doesn't expect it will. "In 2011 they would be in a position to go ahead," she said. "That decision would ultimately lead to the rulemaking that would require the adoption."