US companies could adopt IFRS by 2015: SEC

US companies may be using international accounting standards by 2015, under a
plan being considered by the US securities regulator.

The US Securities and Investments Commission (SEC) released a preliminary
plan which would require US-listed companies to report under international
accounting rules no earlier than 2015.

The SEC said the four-five year lead up followed concerns by respondents on a
proposed adoption roadmap which first proposed in late 2008.

The plan is contingent upon both the US accounting standard setter, the
Financial Accounting Standards Board (FASB), and the international standard
setter, the International Accounting Standards Board (IASB) harmonising their
accounting languages by 2011.

The SEC said it will hold off making a final decision until then.

“As a step toward achieving the goal of a single set of high-quality global
accounting standards, the statement notes that the Commission continues to
encourage the convergence of U.S. standards and the set of international
accounting standards known as International Financial Reporting Standards
(IFRS); in effect, narrowing the differences between the two sets of standards,”
the SEC said in a statement.

In the meantime, it will investigate whether international standards are
sufficiently developed, consistent with the U.S. reporting system and the
independence of the IASB. It will also look into whether there is sufficient
education regarding IFRS, and how it differs from US GAAP.

Other issues include whether US laws or regulations, outside of the
securities laws, for example tax laws and regulatory reporting, would be
affected by a change in accounting standards. Also the SEC would consider the
impact on companies, both large and small, including changes to accounting
systems, changes to contractual arrangements, corporate governance
considerations and litigation contingencies.

The SEC also wants to know whether the people that prepare and audit
financial statements are sufficiently prepared, through education and
experience, to make the conversion to IFRS.

Today’s statement will likely reassure recent national adopters of
international standards, who signed up in the hope that the US would eventually
take on the rules. However, with no firm guarantee, and with the SEC yet to
formally decide on the statmeent itself, there may remains a cloud of
uncertaintity about what the SEC may do come 2011.

Further reading:
considers reaffirming commitment to global standards

Related reading

Fiona Westwood of Smith and Williamson.