|  | | 2007 News and Press Releases | | |
HEADLINE NEWS:
Finance Bigs Like Mandated Global Accounting Rules, Big multinationals favor a quick jump to International Financial Reporting Standards, while smaller domestics want to go slow.
Sarah Johnson
cfo.com. December 14, 2007
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EXCERPT: The Securities and Exchange Commission should let U.S. companies choose between GAAP and international financial reporting standards, said a group of finance and accounting luminaries participating in a roundtable discussion at the regulator's headquarters on Thursday. But that choice will surely lead to a requirement that every U.S. company switch to IFRS, they suggested. The first of two roundtables focused on the question of whether the United States should stick with the "status quo" — as SEC Chairman Christopher Cox called it — or ride the IFRS bandwagon that more than 100 countries are on. When to jump on is the big question the SEC will have to answer if it decides to formally propose the option. Answers from the panelists ranged from 2011 to 2015. The panelists were divided about whether the SEC should mandate the use of IFRS in the United States. They agreed, however, that a single set of globally accepted accounting standards would likely make it easier for the users of financial statements to compare them across borders. They recommended the SEC should design a clear timeline for when companies should begin considering such a change and for when they might have to make the conversion. After recently allowing some international companies to submit their regulatory filings in IFRS without reconciling them to U.S. GAAP, "the next logical step is to ensure a level playing field and ensure U.S. issuers remain competitive," said Gregg Nelson, vice president of policy and financial reporting at IBM. The way to do that is by giving U.S. companies the same option and eventually requiring them to switch, he suggested. Indeed, another question before the SEC is whether it's fair to not offer U.S. companies the same choice as foreign filers that can now use the International Accounting Standards Board's version of IFRS if they wish. Last month, the commissioners voted to eliminate the IFRS-GAAP reconciliation requirement immediately. The SEC has also begun reviewing the more than 80 comment letters received in response to the SEC's recent proposal to give U.S. public issuers the choice between the two standards. Critics of the idea say it could hinder the ongoing convergence between IASB and the Financial Accounting Standards Board. However, the roundtable panelists — who included auditors, corporate executives, academics, investor groups, a representative of a credit rating agency, and a stock exchange official — said accounting rules would continue to improve if the SEC provides U.S. companies with an outline to follow. While businesses and the accounting firms get their feet wet working with IFRS-prepared financials, standard-setters would still be working on improvements to their rules. |
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