Despite the fact that we are just barely through celebrating Memorial Day, I took a refresher look at the holiday calendar the other day and noticed that in 2011, July 4th falls on a Monday, which ensures a three-day weekend.
I mention this forward-looking days-long span of beer and a boxcar of grilled meats because just three days later, on July 7, the Securities and Exchange Commission will sponsor a roundtable to discuss what it termed the "benefits and challenges" of potentially incorporating International Financial Reporting Standards into the financial reporting system for U.S. issuers.
I'm not what you would call a Beltway insider, but even I know that the summer months are far from the most productive time for lawmakers and regulators in the nation's capital. And if you've ever been in D.C. in mid-summer you can understand why.
But enough about the climate. The event as scheduled at press time will feature three panels representing investors, smaller public companies, and regulators. The panel discussions will focus on topics such as investor understanding of IFRS and the impact on smaller public companies, as well as the regulatory environment of incorporating IFRS.
It was roughly 10 years ago when I attended my first meeting on IFRS convergence, with Sir David Tweedie of the International Accounting Standards Board answering questions from London via video. I was new to covering the profession and was just getting my feet wet with the nuances of GAAP, and now I was exposed to a long-range plan that would eventually bring about a single set of high-quality global accounting standards. It was a lot to take in, to be sure. Fortunately, it wasn't long before I learned that international regulators can easily match the glacial pace of their American counterparts when it comes to an agreement of any sort of new or revised standards.
Case in point is the recent announcement that the IASB and the Financial Accounting Standards Board have again pushed back the timeline to finish a series of convergence projects in the original Memorandum of Understanding. The convergence projects on financial instruments, revenue recognition and leasing are now targeted for completion in the second half of 2011. However, the U.S. insurance standard, which had not yet been exposed for public comment, is targeted for completion in the first half of 2012.
Both boards were quick to point out, however, that the June 2011 date was a "target" and not a "deadline." Funny how those semantics never worked with my editors when they awaited a story.
There's a host of other issues to be addressed leading up to the post-July 4th event, not the least of which is the SEC's on-again, off-again enthusiasm for IFRS during the regulator's present administration.
And here are a few others that may be worth considering:
* Some 120 countries use IFRS all or in part, with hundreds of local carve-outs. To me that doesn't come within two area codes of what could even be loosely considered a single set of global standards;
* The future of FASB, should this process actually move forward, and the political infighting that would undoubtedly ensue over who would be the designated standard-setter; and,
* The often-lacking overseas auditing and enforcement guidelines and its effect on financial reporting.
All fodder for what could be, if you'll pardon the pun, a heated summer debate.
I wonder what's on tap for Labor Day?
Bill Carlino
Editor-in-Chief
