Last month, a survey released by Big Four Firm Deloitte revealed that U.S. companies require just a tad more preparation and training before International Financial Reporting Standards can be adopted. My guess — as a more-than-casual observer of the profession — is that that finding, which polled chief financial officers and other senior-level financial professionals, probably surprised no one.With convergence of U.S. GAAP with IFRS an inevitability, the profession needs to get proactive, as opposed to its traditional reactive pose, in bracing for the eventual by-product of that union — a single set of global accounting standards.
Because the results of the Deloitte poll were a bit troubling. Case in point: More than 60 percent of companies indicated that they lacked adequate personnel in their U.S. operations with sufficient knowledge of IFRS to address conversion.
Then there’s the complexity of the conversion process. I can imagine the trepidation of adopting IFRS will be similar to what auditors felt while going through the initial compliance process for Sarbanes-Oxley 404. But there’s also a big difference: SOX was thrust upon the profession in relatively short order, therefore truncating any preparation or education process, whereas convergence has been on the profession’s radar for roughly eight years. Yet according to the Deloitte poll, some 35 percent of the companies that would consider adopting IFRS do not currently have any type of plan for adoption.
In a half-empty, half-full scenario, 30 percent of the CFOs surveyed said that they would consider adopting IFRS if given a choice by the Securities and Exchange Commission within the next three years. However, another 28 percent said that they either lacked sufficient information to make a decision about IFRS, or were undecided.
And that obviously has to change.
The transition effort will require a multi-pronged strategy — beginning with tweaking college accounting curricula to include IFRS, as well as making available to both accounting firms and their clients comparative literature that goes beyond the boilerplate rules vs. principles. For example, at an IFRS conference held recently in New York, Big Four firm Ernst & Young distributed a booklet that detailed the basic differences between IFRS and GAAP, presented in such a way that even yours truly could understand the chasm between them.
At its Spring Council meeting, the American Institute of CPAs introduced IFRS.com, a new Web site to provide information and training materials explaining the differences with GAAP. Meanwhile, Deloitte announced its IFRS University Consortium as a collaborative effort with the academic community to accelerate the integration of IFRS into college curricula, while Ernst & Young plans a similar educational effort.
With convergence, the profession has another opportunity to take the lead on a critical issue. There’s no excuse for getting caught flatfooted.
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