On February 24, 2010, the U.S. Securities and Exchange
Commission ("SEC") issued a statement (the
"Statement") reaffirming its belief that a single set of
high-quality, globally accepted accounting standards would benefit
U.S. investors and facilitate cross-border capital formation.
The Statement follows the SEC's release in November 2008 of
a series of milestones, otherwise known as the proposed Roadmap, to
guide it in determining whether to require U.S. domestic issuers to
use financial statements prepared in accordance with international
financial reporting standards ("IFRS") in the reports
they file with the SEC. The Roadmap contemplated that in 2011 the
SEC would be able to decide whether to require the use of IFRS by
some U.S. issuers beginning in 2014. The Roadmap also contemplated
allowing certain U.S. issuers to voluntarily use IFRS in filings
for fiscal years ending after December 15, 2009, but this has not
After reviewing more than 200 comment letters regarding the
proposed Roadmap, and recognizing the magnitude of the task in
transitioning U.S. issuers to IFRS, the SEC concluded that
substantial additional work was necessary before deciding whether
to incorporate IFRS into the U.S. financial reporting system for
U.S. issuers. As a result, the SEC directed the staff of the Office
of the Chief Accountant, in consultation with the other divisions
and offices of the SEC, to develop and carry out a Work Plan
setting forth specific areas and factors for the staff to consider
in connection with a potential transition to IFRS for U.S. issuers,
including the scope, timeframe and methodology for the transition.
The Work Plan, which is attached as an appendix to the Statement,
addresses many of the issues raised by the commentors on the
proposed Roadmap, including:
Determining whether IFRS is sufficiently developed and
consistent in application for use as the single set of accounting
standards in the U.S. reporting system.
Ensuring that accounting standards are set by an independent
standard-setter and for the benefit of investors.
Investor understanding and education regarding IFRS, and how it
differs from U.S. GAAP.
Understanding whether U.S. laws or regulations, outside of the
securities laws, for example tax laws and regulatory reporting,
would be affected by a change in accounting standards.
Understanding the impact on companies, both large and small,
including changes to accounting systems, changes to contractual
arrangements, corporate governance considerations and litigation
Determining whether the people who prepare and audit financial
statements are sufficiently prepared, through education and
experience, to make the conversion to IFRS.
In the Statement, the SEC directs the staff to provide public
progress reports on the Work Plan and the ongoing convergence
projects being conducted by the Financial Accounting Standards
Board ("FASB") and the International Accounting Standards
Board ("IASB") no later than October 2010, and frequently
thereafter until the work is completed. Following completion of the
Work Plan and the ongoing FASB and IASB convergence projects as
anticipated in 2011, the SEC expects to be able to determine
whether to incorporate IFRS into the U.S. domestic reporting
system. If it does so at that time, the SEC anticipates that 2015
or 2016 would be the first year in which U.S. issuers would be
required to report under the new system.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
When you think about accounting, what may first come to mind may be number crunching, expense reporting or tax season. Admittedly, these are generally all true; however, I would like to introduce you to another side of accounting.
Bernie Madoff. Charles Ponzi. Enron. WorldCom. Most of us have heard of them. Some of us are glued to shows like CNBC’s American Greed, which focuses on the stories and details behind many white-collar crimes, many of which have affected everyday citizens. You would think we could learn.
Many people think succession planning is estate planning (i.e. transfer of ownership). Instead, it is a
formal statement of what will happen to the management of the business when the owner/manager is no longer running it. Consider it to be a "will" for the business.