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April 28, 2009

US profession calls for certainty on IFRS adoption

A number of professional accountancy and audit bodies have called for the US Securities and Exchange Commission (SEC) to set a concrete date for IFRS adoption in the US as soon as possible.

They have warned there is no incentive for companies to prepare for IFRS until there is certainty, and that a 2011 decision will not leave enough time for a 2014 adoption.

The SEC is considering a draft road map for IFRS adoption. Comments were due by 20 April. The proposed road map states that a decision will not be made until 2011. If the SEC decides then to proceed with adoption, there will be a staged transition starting from 2014 for large accelerated filers.

No incentive

The American Institute of Certified Public Accountants (AICPA), Center for Audit Quality (CAQ) and Institute of Management Accountants (IMA) warned in comment letters that the US financial reporting system will only begin to take substantive steps to prepare for IFRS once a mandatory date is set.

“Public companies will be hesitant to commit resources toward adopting IFRS prior to having certainty around the related requirements,” the CAQ wrote.

The IMA said the SEC should make early adoption of IFRS more appealing.

“Right now we don’t believe it is attractive for companies,” president and chief executive Jeffrey Thomson said.

The organisations also warned that a 2011 decision will not provide enough time for companies to adopt IFRS by 2014. Large accelerated filers would have one year or less to make the transition because they would need audited IFRS statements for the years ending 2012, 2013 and 2014.

AICPA chief executive Barry Melancon said that if the SEC wants convergence by 2014, the decision needs to be made in 2010. If they make the decision in 2011 then 2015 or later is a reasonable date for convergence.

The organisations said the funding and governance of the IASB is an important issue to be resolved before a move to IFRS. The AICPA suggested the SEC use part of the current levy on US public companies for accounting standard-setting as a permanent funding source for the IASB.

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