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July 15, 2012

SEC unveils IFRS work plan

The US Securities and Exchange Commission (SEC) final staff report on the work plan towards global accounting standards calls for the International Accounting Standards Board (IASB) to better incorporate and understand the intricacies of a number of distinct domestic reporting and regulatory systems.

The long awaited report does not give any opinion on whether or not IFRS should be adopted in the US and only examines arguments for and against different forms of adoption.

The final report noted there “appears to be relatively less support within the US financial reporting community” for the IASB to set US domestic reporting standards.

“However, the staff found there to be substantial support for exploring other methods of incorporating IFRS that demonstrate the US commitment to the objective of a single set of high-quality, globally accepted accounting standards while addressing some of the aforementioned concerns,” the report said.

Last week an SEC spokesperson told The Accountant the final staff report is expected to be used to evaluate recommendations on the US moving towards IFRS. However, the SEC has no time schedule, at present, for the staff delivering a recommendation on its consideration of adopting IFRS.

Following several delays the SEC was expected to make a decision on whether or not to adopt IFRS this year.

The SEC report complimented the work of the IASB done so far and improvements made since 2010 when the SEC first tasked the staff of the chief accountant’s office with preparing the work plan.

SEC’s chief accountant James Kroeker, who has left the SEC this month, said in December last year that the decision would only to be delayed by a ‘few months’ in order to finish its work plan and arrive at a decision. .

Industry response

In  the past several months many industry stakeholders from around the world have called on the SEC to allow large US coprorates to report under IFRS and delaying the decision further could have serious consequences on the future of international standards.

In a statement the IFRS Trustees said they regret the staff report is not accompanied by a recommended action plan for the SEC to make its decision.

“Given the achievements of the convergence programme inspired by repeated calls of the G20 for global accounting standards, a clear action plan would be welcome,” the IFRS Trustees said.

IASB chairman Hans Hoogervorst said IFRS has already reached a critical mass and this is a “pivotal moment for our organisation”.

“The IASB has started working on a new agenda. The era of convergence is coming to an end. We are revamping our institutional infrastructure to provide for a more inclusive approach to international standard-setting. This is the right timing to come on board and participate in shaping the future of global accounting,” Hoogervorst said. 

American Institute of Certified Public Accountants (AICPA) president and chief executive Barry Melancon said he “applauds” the work of the SEC staff and urges the SEC to consider the staff report with “expediency”.

 “We also urge the Commissioners to allow US public companies the option to adopt IFRS. An adoption option would provide a level of consistency in the treatment of US companies and foreign private issuers that report under IFRS that does not exist today, and would facilitate the comparison of US companies that elect IFRS with their non-US competitors that use IFRS,” Melancon said.

Related article

SEC IFRS adoption decision date unknown

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