The chief executive of a large mid-tier firm predicts the
transition to IFRS could have a much larger impact on the US
economy than the introduction of the Sarbanes-Oxley (Sarbox)

Grant Thornton US chief executive Ed Nusbaum told The
he believes the US Securities and Exchange
Commission could introduce the choice for US companies to prepare
financial statements using IFRS as early as 2010, but a more
realistic time frame for the corporate community to be prepared
would be 2013.

He said that although it is difficult to predict the cost to
individual companies, a move towards IFRS will eventually have a
much wider impact as it will affect more companies than Sarbox.

“In terms of a cost for a single, large public company, it is
hard to tell whether it will be more or less than the previous
cost,” Nusbaum explained.

“In terms of the overall effort across the United States, it is
much more massive because you are really talking about a
fundamental change in accounting. Every professor in every
university across the US, every student, every accountant within a
company, every accountant in public accounting firms like Grant
Thornton need to be educated.

“I am sure the US Securities and Exchange Commission will phase
it in starting with the larger companies but this is something that
will presumably eventually move to every company… There are tens
of thousands, if not hundreds of thousands, of non-listed private
companies in the United States that could be impacted by this that
are not at all by the Sarbanes-Oxley legislation. In fact, the
Sarbanes-Oxley legislation only impacted the very largest of

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Dearth of experience

What is alarming about these claims is that a majority of US
financial leaders are ill-prepared to adopt IFRS. This was yet
again demonstrated by a recent Grant Thornton US survey.

Three quarters of chief financial officers and comptrollers that
took part in the survey admitted they have no experience preparing
financial statements according to IFRS. Promisingly, a similar
proportion of respondents support the use of principles-based
standards, which are more in line with IFRS than the current US

The study confirms the verdict of IFRS experts speaking with
The Accountant (see issue 6053) recently – that the US is
well behind Europe and the rest of the world in terms of
understanding IFRS and being able to implement it in the near

Grant Thornton has already begun an exercise to train between
2,000 and 2,500 staff at a cost of “hundreds of thousands if not
millions” of dollars. Nusbaum said the overall IFRS training effort
will be phased in over years and could involve 100 hours per

He added that some of the training costs could be offset by a
fee hike: “As you look at the accounting firms there will be a one
time increase in fees for work to help companies to convert to IFRS
and to help companies work to IFRS once they have converted. I
suspect some of the fees will offset the costs but we really have
not studied it or looked at it form that standpoint,” Nusbaum

Nusbaum is confident that firms such as Grant Thornton are
already prepared for a move towards the global standards but he
warns that it is the corporate community where training efforts
need to be stepped up. “In order for this to work, corporate
America has to be prepared; it is not just about having the
accountants at Grant Thornton or at any other firm prepared. It is
a matter of having the individual controller and the accounts
receivable clerk and all the massive accounting staffs in companies
prepared,” he said.