The SEC is coming under increasing pressure to decide on what date it will start requiring accounting firms to file financial statements in accordance with International Financial Reporting Standards.
At a forum convened by the Financial Accounting Standards Board in New York this week, some of the speakers seemed all but ready to leap out of their chairs and start shaking the SEC representatives by the collar to demand that they set a "date certain" for the transition.
Until the date is set, they warned, everyone from firm partners to accounting educators to textbook publishers will put off working on preparing for IFRS. They stressed that education needs to be done on a just-in-time basis because if accountants don't start applying the IFRS principles in their work soon after learning about how IFRS works, they might soon forget how IFRS works altogether.
That seems a little hard to swallow. There's already plenty of guidance available in the countries that have adopted IFRS, much of it in English, and the learning curve might not be as steep as some seem to worry.
"CFO and controllers, the top portion of an accounting department, will need four to five days of intense, full-day immersion in IFRS," Bob Dohrer, partner and practice leader in the international assurance services group at McGladrey & Pullen, told me last week. "Sales clerks and payroll clerks and the payroll department will need even less training."
Still, it does seem like the standard setters, regulators, and educators are starting to recognize the need to begin preparing for the onset of IFRS. It's certainly taken a long time to reach this point. One of the speakers at the FASB forum said the effort to harmonize accounting standards worldwide actually dates back 40 years.
AICPA CEO Barry Melancon recommended a three- to five-year timeline. "Awareness is growing among U.S. accountants that IFRS is coming for public companies and most believe it will take three to five years to get ready," he said.
The other 100 or so countries that either require or permit IFRS have been managing the transition in a variety of ways. In some countries, such as China, IFRS has been adopted as part of the body of law. Australia also made IFRS part of its laws. "Their endorsement process is much simpler," said Tricia O'Malley, coordinator of the International Financial Reporting Interpretations Committee. "They table it and, if nobody objects, it becomes law." In Canada, the process is a matter of the Canadian Institute of Chartered Accountants putting IFRS in its official handbook. India and Hong Kong have done similar things, O'Malley noted.
Of course, the process of actually getting firms to use IFRS in favor of U.S. GAAP is going to take more effort than that, and getting legislators to adopt a set of accounting principles can't be much easier than getting the SEC commissioners to do so. As the profession awaits the official roadmap from the SEC, getting an early jump on IFRS seems like the right step in an inevitable direction.
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