Credit rating agency Fitch Ratings said in a new report that it expects the U.S. will still move forward with plans to incorporate International Financial Reporting Standards into U.S. GAAP, but in a “prolonged, cautious and incremental way.”
The agency said Wednesday it believes a renewed emphasis on issuing converged, “high quality” accounting standards and the need to re-expose updated proposals for comments has significantly slowed down the completion of many accounting projects jointly initiated by the Financial Accounting Standards Board and the International Accounting Standards Board. The major priority projects initially scheduled for a June 2011 completion are still at various stages of completion in 2012 and some will likely extend into 2013.
Securities and Exchange Commission chief accountant James Kroeker said at an American Institute of CPAs conference in December that the SEC would need a few additional months to make a decision on whether to move forward with incorporating IFRS into the U.S. financial reporting system (see SEC Postpones IFRS Decision). FASB chair Leslie Seidman and IASB chairman Hans Hoogervorst gave a speech the next day at the same conference in which they said that a new approach was needed instead of the convergence model the two boards had been pursuing for nearly 10 years (see FASB Pushes for ‘Modified Incorporation’ of IFRS).
The SEC expects the standard-setters to complete, or significantly almost complete, the high-priority convergence projects before a decision is made on IFRS, Fitch noted.
“Given the current pace of work on the major accounting projects, the SEC's decision on IFRS may not materialize until later in the year,” said Olu Sonola, a senior director in Fitch’s Credit Policy Group.
Fitch also expects intensifying debate in 2012 as to how entities, mainly financial institutions, account for and disclose European debt exposures. The SEC recently “encouraged” enhanced and more transparent disclosure of debt holdings for several European sovereigns, regardless of materiality.
“The call for additional detailed disclosure by the SEC should hopefully serve as a guide to companies using the IFRS framework—even though they are not required to follow U.S. SEC guidance,” Sonola added.
Other key global accounting trends for 2012 include closing the gap between FASB and IASB on fair value, revisions to leases and revenue recognition, and proposals for mandatory auditor rotation.
The full report, entitled “Accounting and Financial Reporting - 2012 Global Outlook” is available at www.fitchratings.com.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access