A slight majority of the US business community is at loggerheads with the profession over a proposal to allow US and foreign listed companies to file financial statements prepared according to international standards without reconciling to US GAAP.
In a Grant Thornton US study, more than one-half of chief financial officers and senior comptrollers surveyed were opposed to listed companies using IFRS to report their financial results without reconciliation requirements.
This contrasts with recommendations by the American Institute of Certified Public Accountants (AICPA), the largest professional accountancy body in the world, in which US and foreign Securities and Exchange Commission (SEC)-listed companies should be allowed to use IFRS without the often burdensome reconciliation requirements with US GAAP. This month, the AICPA advocated these views to a US Senate panel.
Charles Landes, vice-president for professional standards and services at the professional body, commented: “The AICPA supports the goal of a single set of high-quality, comprehensive accounting standards to be used by public companies in the preparation of transparent and comparable financial reports throughout the world. The debate or question should no longer be whether we move to convergence of high quality accounting standards, but how soon we can accomplish convergence.”
The SEC is weighing whether to allow US companies to report financial results using international standards rather than US GAAP. It follows an earlier proposal by the regulator that would allow foreign companies filing with the commission to use IFRS without reconciling to US GAAP. It appears the wider business community is torn between retaining the current system or moving towards a reporting system whereby companies can choose between IFRS or US GAAP.
The Grant Thornton survey revealed that 56 percent of senior financial executives believe foreign firms should not be allowed to file financial statements prepared according to IFRS without reconciliation to US GAAP. A similar number also feel that US firms should not be able to use IFRS when filing financial statements with the SEC without the same requirements. In addition, only 43 percent of respondents believe that SMEs should use IFRS.