Many financial executives in the U.S. have begun the initial stages of convergence with International Financial Reporting Standards at their companies, but early adoption in 2009 for qualifying companies will be difficult, if not impossible, due to the significant time requirements, according to a new report.
The report, from Financial Executives International’s Financial Executives Research Foundation and Resources Global Professionals, found that a crucial milestone for companies will be the Securities and Exchange Commission’s anticipated 2011 decision on whether or not mandatory adoption of IFRS is in the public interest.
“The timing of the SEC’s roadmap will have a profound impact on the finance profession, and professionals will be closely watching to see how the economic crisis that had escalated subsequent to the IFRS session will affect the ultimate timeline,” said FEI president and CEO Marie Hollein (pictured) in a statement.
The study is based on a roundtable discussion with 30 U.S.-based public companies that focused on the challenges, issues and best practices related to IFRS adoption in the U.S. The study found that companies are using or intend to use some form of external support for their IFRS work, such as external auditors, other accounting firms, professional financial staffing and consulting firms, and other non-accounting consulting firms.
Companies are motivated by the actions of their peers when making IFRS decisions. Of the two early adoption proposals currently suggested by the SEC, “Proposal A” is most preferred by companies, primarily because the three-year comparative reconciliations required under “Proposal B” would further lengthen the conversion process.
The report also outlines four initial steps recommended for IFRS preparation: devise an overall strategy; determine the impact on the company; identify a project team and governance structure; and develop a detailed IFRS game plan.
The new study, “International Financial Reporting Standards: A Project Plan for U.S. Companies,” is the first in an information series FERF is publishing to provide practical professional education on IFRS. The study is free for FEI members, and costs $99 for non-members. It is available at www.ferf.org/bookstore.
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