According to a report by Steve Burkholder in today’s BNA Daily Report for Executives, the respective Chairmen of the International Accounting Standards Board and the Financial Accounting Standards Board discussed at a conference yesterday the potential pros and cons of what would happen if - as posited by IASB Chairman Hans Hoogervorst - the U.S. Securities and Exchange Commission were to potentially permit the optional use of International Financial Reporting Standards – vs. potentially requiring the use of IFRS - by U.S. issuers.
(Note: requiring the use of IFRS in the U.S., aka the “incorporation of IFRS into U.S. GAAP,” remains the preference of the IASB, but a second fallback choice, to show some movement toward ‘adoption’ of IFRS – besides the completion of the current convergence program, would be to allow an “IFRS option” in the U.S.)
The SEC had previously indicated that following completion of its staff’s ‘IFRS Roadmap, ’ the Commission would be in a position to reach a decision on whether or not to require, or permit, the use of IFRS by U.S. issuers for purposes of their SEC filings.
However, the decision was slowed for many reasons, and indeed the slowing of the decision, although derided by some, was applauded by many others, since it is a very complex decision, involving more than just accounting issues -and even “just accounting issues” could be viewed by some as an understatement in itself. Other issues involve all kinds of regulatory reporting, income tax reporting, and matters such as compliance with lending covenants based on GAAP reporting, LIFO/FIFO issues, sovereignty issues raised in connection with Congress’ oversight of the SEC and the SEC’s oversight in turn of FASB, and more.
BNA’s Burkholder notes in his articlethat SEC Senior Associate Chief Accountant Jenifer Minke-Girard also spoke at the conference. Observed Burkholder:
Minke-Girard noted that some members of the SEC have supported some form of an IFRS-reporting option—perhaps for certain companies, or types of companies, ‘‘while everyone else stays on U.S. GAAP.’’ However, she continued, ‘‘I think we just haven’t had consensus on that view.’
This blog has noted the nuances between the use of seemingly interchangeable terminology numerous times, such as:
- Single set, global set of accounting standards, vs.
- Common set of accounting standards
However, the terms above do not necessarily mean the same things to different people, and indeed can be a world apart.
For example, even the fact that “over 100 countries are on a single set of standards – that set of standards being IFRS” is questioned by some, in that some of those countries have adopted their own national brand of IFRS, with their own national flavor or exceptions, thus reducing the original goal of comparability across all filers, regardless of nation, filing in IFRS. And, given the state of the remaining major convergence projects, and some projects not the convergence docket, it is possible that if the U.S. were to incorporate IFRS with a FASB endorsement approach, retaining the existing major differences between U.S. GAAP and IFRS, some would argue as to what extent we actually adopted IFRS vs. an IFRS-lite (or more likely, IFRS-plus) as our own homegrown flavor of IFRS.
I highly recommend reading Burkholder’s Jan. 10, 2013 BNA article, IASB Chief Advocates Optional IFRS Use In United States; FASB Chairman Sees Pitfalls, in its entirety, (see link further below) and am pleased to report that FEI received permission from BNA to link to the article in its entirety. Thank you Steve, and BNA!
Reproduced with permission from Daily Report
for Executives, 08 DER G-6 (Jan. 11, 2013).
Copyright 2013 by The Bureau of National Affairs,
Posted: 1/11/2013 10:48:59 PM
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Filed under: IAS Seminars,IFRS optional,optional IFRS,Hoogervorst,IASB,ICAEW,IFRS,Minke-Girard,NYSSA,SEC,Seidman,Sleigh-Johnson,FASB