As the Financial Accounting Standards Board and the International Accounting Standards Board move forward with plans to produce converged standards in areas such as leasing, revenue recognition and financial instruments, companies are expecting the new standards to have a major impact on their businesses, according to a new survey from PwC.

Two PwC partners discussed the survey results during a press briefing Wednesday, noting that the changes in leasing standards are expected to have the biggest impact, according to the survey respondents. Forty-three percent of the 1,400 respondents said that the converged leasing standards would have a high impact on their organization, compared to 31 percent for the revenue recognition standards and 21 percent for the financial instruments standards. Almost half the respondents have already performed an inventory of their lease portfolio in advance of the adoption of the new standards.

However, the standards are still in flux. “It’s definitely a work in process because FASB is still talking about the leasing parameters of the new model,” said David Schmid, a partner in PwC’s transaction services practice. “They’re focusing on how to define a lease term and how to account for contingent rent.”

Survey respondents were also concerned about the proposed revenue recognition and financial instrument standards. More than half the respondents expect the proposed standard on revenue recognition to affect the timing or amount of reported revenue for their companies. Of those who have performed an analysis of the likely impact of the financial instrument proposals, the respondents expect an increase in the use of fair value and an increase in income statement volatility.

While FASB and the IASB continue to try to iron out their differences over the three major sets of standards, along with a host of other standards that have been put on the back burner, uncertainty continues over whether and when the Securities and Exchange Commission will officially approve the adoption or incorporation of International Financial Reporting Standards later this year. The SEC was originally expected to make a decision by the end of June, but SEC officials have made it known lately that they haven’t committed to that date for their decision. With IASB Chairman Sir David Tweedie set to retire at the end of June and incoming chair Hans Hoogervorst scheduled to take over, there could be added uncertainty in the convergence roadmap later this year.

Still, about 80 percent of the respondents to the PwC survey believe IFRS is coming at some point, according to Schmid.

Updates on the work plan for achieving convergence have not been coming with the regularity that had been promised either. SEC officials have recently floated the idea of something called “condorsement,” which would be somewhere between convergence and endorsement. This would be the approach of some other countries that also have not wholeheartedly embraced IFRS.

SEC Deputy Chief Accountant Paul Beswick spoke about “condorsement” during a speech at an AICPA conference last December. Under this approach, U.S. GAAP would continue to exist, and the IASB and FASB would finish the major projects remaining in their memorandum of understanding. FASB would not begin to work on any major new projects on its own, but as new standards were issued by the IASB, FASB would consider them for incorporation into U.S. GAAP and then integrate them into its FASB Codification.

Whether or not this process would be workable or would just lead to further confusion is an open question. James Kaiser, a partner in PwC’s assurance practice, characterized it as a “trial balloon.”

“It got the accountants debating again,” he said.

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