On February 24, 2010, the Security Exchange Commission
("Commission") issued a statement reaffirming its support
of establishing a "single set of high-quality global
accounting standards."1 The Commission continues to
encourage convergence of U.S. Generally Accepted Accounting
Principles ("U.S. GAAP") and International Financial
Reporting Standards ("IFRS") as an effective means of
achieving this goal. To this end, the Commission authorized the
creation of the "Work Plan" to serve as a guide to assist
the Commission in its evaluation of the impact of using IFRS on
Specifically, the Work Plan focuses on:
Analyzing IFRS in its current format and how it will function
after the completion of a number of convergence projects between
U.S. and international accounting standards-setters.
Determining if IFRS is sufficiently developed and consistent as
a method for use as the single set of accounting standards in the
U.S. reporting system.
Ensuring standards are set by independent standard-setters and
for the benefit of investors.
Investor understanding/education of IRFS and how it differs
from U.S. GAAP.
Understanding whether U.S. laws and regulations (tax,
regulatory reporting) will be impacted.
Understanding the impact on companies and their accounting
Determining if people that prepare and audit financial
statements are sufficiently prepared to make the conversion.
Based on progress achieved by the Work Plan analysis, the
Commission expects to make a decision by 2011 as to whether to
incorporate the IFRS into the U.S. financial reporting system.
Leading up to the 2011 decision time frame, the Commission will
provide status reports beginning in October 2010, followed by
If the Commission determines IFRS convergence is appropriate in
2011, the Commission's February 24, 2010 statement lists 2015
as the earliest for potential compliance by U.S. companies. The
Commission will continue to evaluate this timeline throughout the
Work Plan analysis and update appropriately.
Because of the generality of this update, the information
provided herein may not be applicable in all situations and should
not be acted upon without specific legal advice based on particular
For title companies issuing title insurance policies and attorneys who defend these companies, a recent case from the Eighth Circuit should serve as a reminder that, if mistakes in legal descriptions are made, they should be corrected as soon as possible.
Overseas Shipping Group ("Overseas") recently sued its former attorneys, a prominent New York-based law firm, for legal malpractice in drafting credit agreements that resulted in the company incurring an estimated $463 million in tax liability.