US could switch to IFRS in six years

US companies could be allowed to switch to international accounting rules in
six years, the regulator announced yesterday.

The move would lower the costs of compliance and increase the international
competitiveness of US plc.

The Securities and Exchange Commission approved a ‘road map’ which is set to
allow corporations –whose market values are in excess of $700m (£350m) to
abandon US GAAP in favour of IFRS.

‘A global set of high-quality accounting standards would be an international
language of disclosure, transparency and comparability. It’s a goal worth
pursuing,’ said SEC Chairman Christopher Cox.

However outspoken US critics such as senator Jack Reed, a Democrat, argued
that the SEC could put investors at risk by allowing external less-aggressive
regulators to have the power of overseeing the rules,

The SEC has no power as yet over the International Accounting Standards
Board, which sets global accounting rules. But Cox has backed plans for a
monitoring group which would be inclusive of SEC
representation to oversee the work of the IASB.

The final decision to switch to IFRS would also depend on whether the US
manages to merge its rules with IFRS, a joint project currently co-cordinated by
the IASB and the US Financial Accounting Standards Board.

The roadmap suggests that the 20 largest companies – ranked according to
their international domination of an industry – could be required to follow IFRS
in six years time while those with market values below $75m would switch in

The SEC will seek public comment on the issue for 60 days.

Further reading:

SEC unveils roadmap for IFRS by 2014

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