The trustees of the IFRS Foundation have published their own staff’s analysis of the Securities and Exchange Commission’s final staff report on International Financial Reporting Standards in an effort to address some of the findings and prod the U.S. into embracing IFRS.

The SEC published its final staff report in July outlining the pros and cons of incorporating IFRS into U.S. GAAP (see SEC Staff Releases Staff Report on IFRS Work Plan). While the report described some of the benefits of IFRS, it also included criticisms of the heavy costs of transitioning to IFRS for many companies and the remaining significant differences between IFRS and U.S. GAAP, which the decade-long convergence efforts have failed to eliminate.

The report represented the culmination of nearly two years of work by SEC staff to analyze the issues related to the possible incorporation of IFRS into the U.S. financial reporting regime.

Shortly after the SEC staff report was published, the trustees of the IFRS Foundation, which oversees the International Accounting Standards Board, issued a statement indicating their commitment to give careful consideration to the report’s observations. The trustees then asked staff members to conduct an analysis of the SEC staff report. The analysis was posted Tuesday to the IFRS Foundation’s Web site.

The staff’s detailed analysis addresses matters raised in the SEC staff report regarding IFRS as global accounting standards, the IASB as a global accounting standard-setter and the challenges for a U.S. transition to IFRS, including adoption and endorsement matters.

“The SEC staff report notes that even after a decade-long convergence program, some differences remain between IFRS and U.S. GAAP,” said the analysis. “The SEC staff report does not imply that either U.S. GAAP or IFRS has the better solution, only that they are different. Nevertheless, the importance to the U.S. of these differences should not be downplayed. At the same time we note that, as a result of more than 10 years of joint work with the FASB to improve IFRS and U.S. GAAP and bring about their convergence, the differences that the U.S. will have to bridge are significantly smaller in scope than the differences faced by other major countries that have already adopted IFRS.”

The IFRS Foundation staff report also addresses the question of whether accountants in the U.S. are ready to handle the transition. “The SEC staff report notes that the large U.S. international public accounting firms and multinational companies have an extensive understanding of IFRS,” they wrote. “We believe that this substantial human capital capability puts the U.S. at a distinct advantage when compared to other jurisdictions setting out to make the transition to IFRS. However, in the same way as for other jurisdictions, we accept the argument that U.S. preparers with limited international operations, and smaller and mid-sized U.S. audit firms, will need to further develop their IFRS competencies in advance of any transition to IFRS. The experience from other developed jurisdictions that have already completed their transitions to IFRS has shown that, with appropriate planning, the human capacity can be successfully developed at an appropriate cost.”

To assist staff in their analysis of the SEC staff report within an international context, the IFRS Foundation also commissioned a study of the existing academic research on the benefits and consequences of global accounting standards. That research is published as an appendix to the staff analysis.

The head of the IFRS Foundation said the report indicated that there are no “insurmountable obstacles” to adoption of IFRS in the U.S.

“In their February 2010 statement on global accounting standards, the SEC commissioners’ reaffirmed their strong commitment to a single set of global standards and the recognition that IFRS were best placed to serve that role for U.S. markets,” said IFRS Foundation chairman Michel Prada in a statement commenting on the publication of the staff analysis. “The statement directed SEC staff to develop and execute a work plan to support this process and the final SEC staff report on IFRS was published in July 2012. The IFRS Foundation staff analysis released today complements the findings of the SEC staff report with academic research as well as the experiences of other jurisdictions that have already completed their own transitions to IFRS. Accordingly, the analysis should also be of use to other jurisdictions that are evaluating whether and how to adopt IFRS.

“While acknowledging the challenges, the analysis conducted by the IFRS Foundation staff shows that there are no insurmountable obstacles for adoption of IFRS by the United States, and that the U.S. is well placed to achieve a successful transition to IFRSs, thus completing the objective repeatedly confirmed by the G20 leaders,” Prada added.