Increasing globalization coupled with related regulations continues to put pressure on moving towards a common global accounting framework – International Financial Reporting Standards (IFRS). On July 13, 2012, the Office of the Chief Accountant (OCA) of the Securities and Exchange Commission (SEC) issued a final staff report on its Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers (the work plan). This report summarized what the SEC staff in the OCA learned in conjunction with carrying out its work plan, which was originally issued in February 2010. While this report reiterated the U.S. commitment to the objective of a single set of high-quality globally accepted accounting standards, it did not provide a final recommendation to the SEC on whether U.S. issuers should be required or allowed to apply IFRS as issued by the International Accounting Standards Board (IASB). However, the report did include:
- Key observations about constituents' views with respect to the application of IFRS by U.S. issuers
- Seven significant themes noted by the SEC staff during their completion of the work plan
While the SEC has not taken significant action with respect to the work plan since its issuance, in February 2014, it issued a draft Strategic Plan for Fiscal Years 2014-2018. In that plan, the following statement was made: "Due to the increasingly global nature of the capital markets, the agency will work to promote higher quality financial reporting worldwide and will consider, among other things, whether a single set of high-quality global accounting standards is achievable." In addition, James Schnurr, the Chief Accountant in OCA, made some remarks on the use of IFRS by U.S. issuers at the AICPA National Conference on Current SEC and PCAOB Developments in December 2014. Based on feedback received to date, he indicated that U.S. constituents are generally not supportive of full adoption of IFRS or a broad-based option to adopt IFRS. He indicated that, as a result, the SEC staff is considering other alternatives, including one that would allow voluntary disclosure of IFRS-based information in SEC filings. While there is continuing dialogue about the application of IFRS by U.S. issuers, the SEC and SEC staff’s next steps and timetable on this subject are unclear. For the latest information on the SEC's Work Plan for Global Accounting Standards, see their Spotlight webpage.
Understanding the impact of IFRS and available resources
Currently more than 100 countries use IFRS, so if your business goals include global expansion, it is critical to educate yourself about the impact on your financial reporting processes and business now. The overall implications of IFRS are numerous and reach beyond accounting to affect the following business areas: operations, tax, financing, contracts, compensation programs, information technology systems and internal controls. Therefore, it is important to closely follow the SEC's actions along with new developments from other standard setting bodies in order to effectively address the implications to your business.
The following are a variety of resources and reference materials to help you gain a better understanding of what IFRS means for your organization. Some of these resources are from our global network, RSM International (RSMI).
U.S. GAAP vs. IFRS comparisons at-a-glance series
A series of comparisons providing an overview of the significant differences between U.S. generally accepted accounting principles (GAAP) and IFRS for a specific topic designed to help you gain a better understanding of what IFRS means for your organization.
Financial Reporting Insights is a biweekly resource for recent financial reporting developments and practice issues. Financial Reporting Insights articles about IFRS and International Standards on Auditing can be found on the International page of the Financial Reporting Resource Center.