Institute of Chartered Accountants in England and Wales (ICAEW) warns recent IFRS adoption proposals by the Securities and Exchange Commission (SEC) are “fraught with risks and drawbacks”.
The US SEC issued a recent publication, which called for a staged transition process to incorporate IFRS into US GAAP through a combination of convergence and endorsement, referred to as “condorsement”, but the ICAEW recommends a simultaneous transition to IFRS instead.
“Having seen how IFRS adoption worked for listed companies in the UK and the rest of Europe, it seems clear that the best strategy to minimise market disruption is a simultaneous transition on a mandatory, well-publicised and certain date,” ICAEW financial reporting faculty head Nigel Sleigh-Johnson said.
The ICAEW also claim the SEC’s estimate of five to seven years for the condorsement process is optimistic.
However, the institute is pleased that the role of the Financial Accounting Standards Board was clarified by SEC.
“The IFRS model works best when it is underpinned by strong national standards setters in each jurisdiction, which can contribute to and influence the work of the International Accounting Standards Board. The UK ASB is a shining example,” Sleigh-Johnson said.