The National Association of State Boards of Accountancy is urging the Securities and Exchange Commission to withdraw its proposed roadmap for transitioning to International Financial Reporting Standards.
NASBA said in a comment letter to the SEC that it believes that moving to convergence with IFRS, rather than simply adopting the international standards, is the right path for the SEC to follow. NASBA wrote a letter to the SEC asking it to withdraw the proposed roadmap and instead support the joint efforts of the Financial Accounting Standards Board and the IASB to converge standards by 2011.
NASBA pointed out in the letter that FASB is responsible for setting accounting standards in the U.S. for both U.S. public companies that report to the SEC as well as private companies that do not file reports with the commission.
NASBA Chairman Thomas Sadler (pictured) told WebCPA that the letter is intended to show support for FASB and avoid superseding FASB with the IASB, especially when it comes to standards for privately held companies.
“We are encouraging the continuation of the convergence process and support FASB in the development of overall accounting standards, including the international and U.S. standards convergence,” he said. “If there’s no FASB, where will the standard-setters be for private companies? How will that be funded, how will independence be maintained and how will U.S. authority over FASB be exerted?”
IASB spokesman Mark Byatt declined to comment on the letter.
Other accounting firms are weighing in as well. “We support the SEC ideals of a roadmap,” said Keith Peterka, part of the professional standards group in charge of IFRS at CBIZ/Mayer Hoffman McCann. “We support not an adoption of IFRS, but a converging of the best standards.”
The firm does not have a large SEC practice, but even privately held clients ask about IFRS. “When we speak to our clients, there are a lot of misconceptions about IFRS, that it’s more user friendly, that it’s more principles-based," said Peterka. "But even though it’s principles-based, that doesn’t mean it’s easier to comply with.”
In a new survey by Deloitte of 1,700 private company finance officials, more than 40 percent said their companies would take positive action when the IASB completes its project on private company reporting later this year. Deloitte found that 33 percent of the finance professionals said they were interested in having a simplified, self-contained set of accounting standards that are appropriate for public entities.
Close to 30 percent believe that international standards will reduce their financial reporting burden, and just over 21 percent cited better comparability for users of private company financial information. Almost 14 percent of the respondents said they would consider adopting the IASB’s new standard in the mid-term, and just under 27 percent indicated they would assess the costs and benefits of adoption.
NASBA wants to make sure that FASB isn’t left out of any future standard-setting by the IASB. “We don’t say the roadmap should be abandoned,” said Sadler. “We say the FASB influence and the U.S. standards should have full consideration in any move to consolidation of international accounting standards. Our weight of concern is to FASB, and we’re opposed to abandonment of FASB. In any standard-setting, the impact on non-issuers must be fully and carefully weighed.”
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