Wholesale adoption in the U.S. of International Financial Reporting Standards seems unlikely to occur in the near future as the Financial Accounting Standards Board and the International Accounting Standards Board continue to move away from full convergence of their standards, according to a Fitch Ratings report.

Three joint FASB and IASB projects remain outstanding—financial instruments, insurance and leasing, Fitch noted. Differences in financial products between U.S. institutions and those following IFRS, along with varying approaches in application, mean that a one-size-fits-all accounting approach for financial instruments are problematic. In addition, on the insurance standards, U.S. constituents have raised a number of concerns, including that the proposal would ensnare both insurance and non-insuring issuers. These considerations resulted in the joint insurance project also falling by the wayside.

Discussions remain on track over a joint FASB and IASB standard for lease contracts. However, some detailed issues have yet to be resolved and there may be some minor differences in application between the final IFRS and U.S. GAAP standards.

Nevertheless, the two standard-setters recently marked successful completion of their joint project on revenue recognition, Fitch acknowledged. The new revenue recognition standard was issued in May by FASB and is nearly identical to a new IFRS standard issued on the same date. U.S. public companies using GAAP will be required to apply the standard for annual reporting periods beginning after Dec. 15, 2016, with private companies required to apply it after Dec. 15, 2017. The revenue recognition standard should not affect overall contract profitability, according to Fitch.

However, for many companies, the new rules will affect the timing of revenue, and Fitch believes this has the potential of making margins less consistent over time due to sales deleverage. Transition to the new rules may provide an opportunity for companies to scrutinize their contracts. Changes to terms and conditions may then be considered to optimize revenue under the new rules or remove redundant conditions.

In the interim, accounting standards updates last year were mostly clean-ups of previous pronouncements or updates. As such, they are likely to have minimal impact on corporate credit metrics and cash flows, according to Fitch.