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CPAs reluctant to embrace IFRS for US companies

Despite supporting a move towards adopting IFRS in principle, US certified public accountants (CPAs) in business are largely opposed to international standards being enforced at their own companies, according to a new study.

Forty-two percent of respondents felt that US companies should wait for convergence before filing under IFRS is allowed, while 33 percent said US companies should use US GAAP for the foreseeable future. Only about 11 percent believe US companies should file under IFRS as soon as practicable, while 15 percent believe there should be a choice between US GAAP and IFRS. CPA Survey US companies filing under IFRS

The Business and Industry Economic Outlook Survey canvassed the opinions of more than 1,500 senior financial executives and nearly 90 percent of these were either chief financial officers, controllers, chief executives or chief operating officers. It was conducted by the American Institute of Certified Public Accountants (AICPA) in partnership with the University of North Carolina (UNC) this year.

The study revealed that if given the option to file under IFRS or US GAAP, 58 percent of US companies would continue using US GAAP.

Nearly two-thirds of organisations have not begun to prepare for IFRS adoption and most respondents are unsure what impact IFRS will have on transparency, legal liability, earnings management and fraud reporting.

Mark Lang, a professor at UNC’s Kenan-Flagler Business School, observed: “Overall, while there appears to be solid support for IFRS in principle, relatively few firms are prepared to apply it in practice and there is a good deal of uncertainty about the likely effect.”

Most respondents supported the recent US Securities and Exchange Commission’s decision to allow foreign registrants to file in the US under IFRS without submitting a reconciliation statement to US GAAP.

AICPA senior vice-president Arleen Thomas said: “The move towards International Financial Reporting Standards has gained momentum very rapidly since the Securities and Exchange Commission’s decision to eliminate the reconciliation requirement for foreign filers. The AICPA is committed to providing the leadership, advocacy and education that our members expect as we navigate what will be a very significant change in the profession.”

The study also questioned senior executives about their thoughts on the state of the US economy. A 59 percent majority of CPAs said they were pessimistic or very pessimistic about the outlook for the world’s largest economy over the next 12 months. Only 11 percent of respondents expressed optimism about the economy. This is the first time since the study began in December 2005 that pessimism has dominated an optimistic outlook.

“At the same time, CPAs express more confidence in their own businesses, suggesting the downturn may not be as deep as some may fear,” Thomas explained.

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