Late this afternoon, the U.S. Securities and Exchange Commission released its final staff report on the incorporation of International Financial Reporting Standards into the U.S. financial reporting system. See the SEC's press release
and SEC's final staff report on IFRS
As reported by BloombergBNA's
Steven Marcy earlier today, in Schapiro Has no Time Frame for SEC Decision on Use of IFRS in U.S.,
SEC Chairman Mary L. Schapiro told a group yesterday that the SEC staff's final report on IFRS was expected to be released "shortly."
Public Comment Will Be Sought; No Time Line for Commission Action
Partially putting to rest some of the debate that has ensued among certain accounting observers and commentators as to whether or not the SEC would seek public comment before taking any formal action on IFRS, the SEC Chairman stated, according to Bloomberg/BNA's Marcy: “We'll seek public comment on [the report] and try to get input, and then the commission will start to deliberate and come to a conclusion."
As to when the Commission may take formal action on the incorporation of IFRS in the U.S., Schapiro stated: "I have no time line for you.”
Schapiro's remarks were made yesterday were at a meeting of the IFRS Foundation and the IFRS Foundation's Monitoring Board in Washington, DC. The IFRS Foundation oversees the International Accounting Standards Board (IASB - standard-setter for IFRS) with the IFRS Foundation Monitoring Board (made up mainly of representatives of the International Organization of Securities Commissioners or IOSCO, including the SEC.
SEC's Nester Provides Context
For further context on the scope and objective of the SEC staff's final report, which in the weeks leading up to its release, had been rumored to contain findings, but not 'recommendations' per se, SEC Spokesman John Nester gave a detailed interview to Bloomberg/BNA's Denise Lugo to clear up any confusion.
My two cents (please see the disclaimer posted on the right side of this blog): it remains to be seen what type of formal action will ultimately result, and based on the nature of that action, if there will be another public comment period. For example, if the SEC goes down the formal rulemaking path, then I believe a Proposed Rule will potentially be issued for public comment. If the SEC should determine that no formal rulemaking is required, based on the nature of how IFRS is to be "incorporated" into U.S. GAAP - and the phrase "incorporated into U.S. GAAP" is key - because that is different from a 'big bang' shift to a completely different (or even narrowly different) set of a new book of standards so to speak, if, e.g., 'incorporation' continues to happen organically over time through the FASB and IASB's 'convergence' efforts. However, the 'major projects' currently being completed/undertaken by the boards are set to be completed over the next couple of years, and some accounting observers point out there will still be a sense of comparing apples to oranges in looking at US GAAP vs. IFRS based financial statements. However, the counter-argument goes, there are more countries (over 100) currently on apples-based accounting (i.e. IFRS) than oranges (i.e. U.S. GAAP). Among bloggers who frequently comment on this topic are Tom Selling, author of The Accounting Onion, and Prof. Dave Albrecht, author of The Summa.
Another factor will be who the next SEC Chief Accountant will be. As previously reported, Chief Accountant Jim Kroeker announced in June he would be leaving the Commission in July, and with publication of the final staff report, he, along with colleagues in the Division of Corp Fin and Office of International Affairs, have shephearded the tremendous amount of work and thought that seems to have gone into IFRS considerations by the staff so far.