Companies Need More Preparation for IFRS

U.S. companies need more preparation and training before International Financial Reporting Standards can be adopted, according to a survey of CFOs and other senior finance professionals by Deloitte.

Thirty percent of survey respondents said they would consider adopting IFRS if given a choice by the Securities and Exchange Commission within the next three years, up from 20 percent who answered the same question six months ago. But another 28 percent said they either lacked sufficient information to make a decision about IFRS, or were undecided.

U.S. generally accepted accounting principles are on a path to convergence with IFRS, and many observers believe that IFRS will eventually replace GAAP in the U.S. The American Institute of CPAs has launched a new Web site, IFRS.com, to train members in the differences between the two standards, and plans to include IFRS in the Uniform CPA Exam (see AICPA Votes for IASB as Standards-Setter).

Deloitte also recently announced its IFRS University Consortium as a collaborative effort with the academic community to accelerate integration of IFRS into college curriculums (see Deloitte Forms IRS Education Consortium). Ernst & Young has an educational effort of its own (see Ernst & Young to Develop IFRS Curriculum).

Those initiatives may help alleviate some of the obstacles to IFRS adoption cited by the survey respondents. More than 60 percent of companies say they lack an adequate number of personnel in U.S. operations that collectively have a level of IFRS knowledge to address a conversion to IFRS. The main obstacle to IFRS adoption is a fear of the complexity of conversion. Thirty-five percent of the companies that would consider adopting IFRS do not have a plan for adoption.