The Institute of Chartered Accountants in England and Wales has written to the U.S. Securities and Exchange Commission urging the SEC to adopt International Financial Reporting Standards.
In its comments on the SECs proposed roadmap to IFRS from U.S. generally accepted accounting principles, the ICAEW, which claims to be Europes largest accountancy body, said it believes the whole world could benefit if the U.S. adopts IFRS. The deadline for comments on the IFRS roadmap is Monday. The ICAEW added that the SEC should decide quickly on IFRS transition deadlines to limit the uncertainty for U.S. companies.
The close scrutiny of accounting for financial instruments during the financial crisis has made the need for comparable financial reporting even more obvious, said Dr. Nigel Sleigh-Johnson, head of the ICAEWs Financial Reporting Faculty. We believe strongly that the transition by U.S .companies to IFRS would not only benefit U.S. companies, but the whole world, as it will improve transparency and comparability globally.
In its submission to the SEC on the IFRS roadmap, the ICAEW highlighted the importance of technical independence and robust due process in the setting of accounting standards. The ICAEQ recommended some critical success factors for U.S. adoption of IFRS, such as early educational programs for users and preparers of financial reports as well as well-understood transition deadlines.
We know from our 2007 study into IFRS implementation across the EU that companies need a significant amount of time to prepare properly, said Sleigh-Johnson (pictured). A 2011 decision with potential mandatory use of IFRS from 2014 might be tight. However, the most important thing for businesses is certainty. The roadmap approach to decision-making might result in uncertainty that discourages companies from early adoption out of concern that they might have to revert to U.S. GAAP.
The ICAEW called for the SEC to take its final decision as early as possible and set a realistic, fixed, clear and certain timetable for transition. It also suggested that, as far as possible, the number of changes to the standards should be limited during the transition period to help companies come to grips with the existing IFRS requirements.
According to the ICAEW, the best option is to aim for a simultaneous transition as far as possible rather than a multi-stage one, as the market is better able to deal with one big change rather than a complex and protracted process of change.
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