At long last, the SEC has published its proposed roadmap for the transition to International Financial Reporting Standards, but the “date certain” is as uncertain as ever.
The SEC won’t be voting to set a mandatory date for companies to switch to IFRS until 2011, noted John White, the director of the SEC’s Division of Corporate Finance, at a Financial Executives International conference in New York. Until then, the roadmap isn't mandatory.
Companies can begin preparing earlier, however. The top 20 U.S-based public multinational companies, or “issuers,” according to market capitalization in particular industry segments, can apply to submit their financial statements in IFRS starting with fiscal periods after Dec. 15, 2009. They will act as guinea pigs to see how much it will cost companies in the U.S. to make the transition.
As explained by SEC Deputy Chief Accountant James Kroeker, the issuers would first obtain a “no objection” letter from the SEC’s Corporate Finance office, and that would allow them to submit their financials in IFRS, even if their market cap goes down in comparison to their competitors below the top 20. Once they obtain the letter, they would have three years to adapt to IFRS. “If your competitiveness changes in the next three years, it allows you to continue to be eligible,” he said.
The SEC seems fairly sure that the U.S. will eventually make the transition to IFRS, even if the commission ultimately decides to push back the timing until later. It’s giving interested observers 90 days to comment on the roadmap once it finally gets published in the Federal Register. That hasn’t happened quite yet, although the roadmap is finally up on the SEC’s Web site at least. SEC Chief Accountant Conrad Hewitt expects the roadmap to appear in the Federal Register in a week’s time, and then the comment period will begin.
He noted that most proposals only get a 60-day comment period, but he believes the IFRS roadmap is “important for the future of our country.” He expects the SEC to be inundated with comments on the roadmap. With the holidays getting in the way, not to mention the transition to a new administration in the White House, the SEC wanted to give participants a chance to fully air their views.
Hewitt noted that he inherited the IFRS convergence process from his predecessor, former Chief Accountant Don Nicolaisen, when he took over in 2006 and he could have killed the whole idea, but having worked on the boards of a number of multinational companies, he recognized the importance of having a single “high-quality” set of international accounting standards. The U.S. will be following the lead of 114 other countries that have either adopted or are on the road to adopting IFRS. That doesn’t necessarily mean it’s a done deal, though. We’ll have to wait until at least 2011 to find out.
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