Lack of convergence delays SEC’s IFRS decision
International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Lack of convergence delays SEC’s IFRS decision

jameskroeker.jpg

The SEC’s chief accountant explained on Monday why the organisation has had to put back its decision on whether or not International Financial Reporting Standards should be adopted in the US.

.James Kroeker told an accountants’ conference in Washington, DC that the SEC would not be in a position in 2011, as scheduled, to decide whether or not the US should adopt IFRS because the convergence agenda of the Financial Accounting Standards Board (FASB), a US body, and the International Accounting Standards Board (IASB) was running late. 

The SEC's chief accountant said that his organisation had made it clear in February 2010 that completion of the convergence projects was a criteria in its consideration of IFRS. The IASB website states that 20 jurisdictions, including Australia, Canada, China and the EU, around the world either require the use of the international standards or will do so soon.

Kroeker commended FASB and IASB for listening to those who advised them that more time was needed for the convergence agenda to be completed.

“The Boards, wisely in my view, also agreed that a number of projects would be delayed even further to allow for a sharper focus on a smaller number of key MOU projects and to allow for a phased approach to the issuance of exposure drafts and the resulting final standards.

“Success in this endeavor should and will be measured not by the precise timing of completion of any of the given projects, nor should it be measured by whether the timing was delayed to provide for a phased approach to issuance of an exposure draft. Instead of focusing on a few additional sands of time, I believe success should be, and ultimately will be, measured by the quality of the resulting output.”

Kroeker explained that the boards had made progress. For example, convergence standards had been agreed this year on increased transparency related to items reported in Other Comprehensive Income and how fair value should be determined for financial reporting purposes, and similar standards on revenue and leasing were getting closer. However, he said it was not possible to say when the financial instruments project, which has run into difficulties over an impairment model, would be completed. Hedging and offsetting are other topics under discussion for convergence.

Staff from the SEC are completing a work plan to set out how the commission could and should go forward with making a decision on IFRS.

“The staff will need a measure of a few additional months time to produce a final report. At the same time, the staff is in the process of developing an approach for Commission consideration,” Kroeker said, adding that a framework for adoption should:

  • Demonstrate a high level of support for US commitment to continued development and use of global consistent high quality accounting standards;

  • Provide both in fact and in substantive operation clear US authority over standards applicable in the US capital markets;

  • Provide for and facilitate a strong US voice in the process of establishing global accounting standards;

  • Be responsive to the economic and other impacts of change; and

  • Consider whether to retain US GAAP as the basis for US financial reporting, thereby mitigating the costs and complexity of introducing a new set of standards under regulatory regimes, contractual documents, and U.S. laws under which compliance with US GAAP is often specifically contemplated.



more across site & bottom lb ros

More from across our site

The Labour Party is working hard to convince business that it will bring stability to tax policy if it wins the next UK general election. But it will be impossible to avoid creating winners and losers
Burrowes had initially been parachuted into the role last summer to navigate the fallout from the firm’s tax leaks scandal
Barbara Voskamp is bullish on hiring local talent to boost DLA Piper’s Singapore practice, and argues that ‘big four’ accountants suffer from a stifled creativity
Chris Jordan also said that nations have a duty to scrutinise the partnership structures of major firms, while, in other news, a number of tax teams expanded their benches
KPMG has exclusive access to the tool for three years in the UK, giving it an edge over ‘big four’ rivals
But the US tax agency’s advice is consistent with OECD guidance and shouldn’t surprise anyone, other experts tell ITR
A survey of more than 25,000 in-house counsel reveals that diversity initiatives are a high priority when choosing external counsel
The report is aimed at helping 'low-capacity countries', the OECD has claimed
The UK tax agency appears to be going after easier, lower value targets, one lawyer has claimed
Criminal experts have told ITR that the case of Ulf Johannemann emphasises the fine line between tax avoidance and tax evasion
Gift this article