The New York State Society of CPAs heard from representatives of the International Accounting Standards Board and the U.S. Financial Accounting Standards Board about the current state of International Financial Reporting Standards and where it’s headed (or not) in the U.S.

At a conference at the NYSSCPA’s offices on Wednesday, IASB board member Patrick Finnegan updated attendees on the status of the leasing project and other activities. He noted there has been some concern with the amount of disclosures and companies not being able to find out all the information about leasing assets. Timelines are another problem.

“Transition is a big issue,” he added. “How do you transition? We’re also conscious about the potential costs.”

While the IASB and FASB are still working out the details, they plan to release a second exposure draft on this topic, potentially next week, but Finnegan cautioned that the process of providing comments back to the staff will take some time. The IASB hopes to get them all by the first quarter of 2013, which will then take them into next summer. The IASB and FASB will then redeliberate over the standard in the fall to give the board some time to digest all the comment letters.

“This exposure draft will be more targeted,” Finnegan observed. “It’s more like a rifle shot, which hopefully will expedite the process, but the reality is people will comment on what they want to comment on. If all goes well, we will have a final standard sometime in 2014.” Finnegan acknowledged that the leasing standards have been a very controversial topic, with discussion papers going back to the 1990s, and said the boards would need the CPAs’ support to complete the project.

Finnegan also discussed IFRS for SMEs, the IASB’s stripped-down set of standards for small and medium-sized entities issued in July 2009. “As my fellow board member Paul Pacter likes to say, ‘It is good accounting made simple,’” Finnegan noted. The 230-page document has made “quite a splash” since it was introduced, he added. Finnegan noted that while the 50 largest stock exchanges in the world only have about 45,000 public listed companies, Europe has approximately 28 million private sector enterprises while the U.S. has roughly 25 million private entities.

“There are an extraordinary number of entities that might be eligible to use this standard,” he said. While the full set of IFRS has more than 3,000 items in the disclosure checklist, there are roughly just 300 disclosures in IFRS for SMEs. As of this month, over 80 jurisdictions around the world have either adopted IFRS for SMEs or stated a plan to adopt it within the next three years.

In the final presentation of the conference, Remi Forgeas, CPA, of Honeck Advisory LLC, noted that one reason for the popularity in many countries of IFRS for SMEs is that many of them do not have a significant stock market and 99 percent of their companies are privately owned.

“With a 230-page book, everything is in there, and at the end of the book they have implementation tools,” he said. “This book is only revised every three years, so from one year to another you don’t have to worry about changes. It’s less expensive that way.”

Meanwhile FASB is working on its own decision-making framework for setting differences for private companies, while the Financial Accounting Foundation has set up a Private Company Council and the American Institute for CPAs is creating a Financial Reporting Framework for Small and Medium-sized Entities for private companies that only need OCBOA, or Other Comprehensive Basis of Accounting, instead of the full U.S. GAAP (see AICPA Moves Ahead on Financial Reporting Framework for SMEs).

“There probably will be a lot of change in the next few years with the FASB and with the AICPA,” said Forgeas. “The AICPA plans to complete it sometime in 2013 and the FASB will take some time to go through the comments.”

FASB board member Marc Siegel also spoke at the conference, discussing the status of the private company decision-making framework for private companies and the disclosure framework, as well as joint projects with the IASB.

“FASB will continue to work with national, regional and international standard setters to develop more comparable global accounting standards,” he noted in his presentation, but added, “FASB will continue to focus on improving U.S. GAAP.”