US firm leaders are losing patience
with the ‘wait and see’ approach decision makers are taking when it
comes to IFRS.
The adoption of IFRS is the most pressing issue
facing US audit firms and their clients since the introduction of
the Sarbanes-Oxley Act post-Enron.
Firm leaders are no closer to learning when the
nation will adopt IFRS than they were in November 2008, when the
Securities and Exchange Commission (SEC) first proposed a road map
with potential adoption dates.
This month, the SEC released a statement to
confirm it would make a decision on adoption in 2011 provided
certain criteria are met. The regulator also indicated IFRS would
not become mandatory for the first batch of companies any sooner
A cause for concern
This uncertainty is concerning to large
corporations and their professional services advisers, because any
move to a new accounting framework will require a huge investment
in new systems, methodologies, skill-sets and education.
McGladrey & Pullen national assurance
services director Bob Dohrer said the SEC delays are causing
anxiety among clients, some of whom have already been advised they
should begin preparation for IFRS.
“Those companies are either expending dollars
towards that or are waiting and becoming greatly concerned. So, we
certainly feel that it is incumbent of the SEC to make an
announcement and to clarify the position,” he said.
Nexia International North and Central America
chairman Larry Chastang said it is conceivable the US could ditch
IFRS altogether and continue applying US GAAP. There are reports
that some US firms are delaying investment in training accountants
on IFRS because of the uncertainty.
“That’s where most of the firms are sitting.
Initially, everyone was saying ‘it’s going to come, we need to get
prepared’ and we started taking steps to prepare and then it was
all delayed,” Chastang explained.
On the flip side, KPMG US national IFRS leader
Janice Patrisso said KPMG is continuing to ramp up its
professionals’ knowledge of IFRS. The IFRS expert believes the
SEC’s statement was positive in that it signalled a belief the US
should move towards a single set of global standards.