Ifrs Adoption in the U.S, Why the Postponement

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IFRS ADOPTION IN THE U.S; WHY THE POSTPONEMENT
By Liu, Qun,Hiltebeitel, Kenneth

Monday, November 1 2010
Published on AllBusiness
In November 2008, the SEC proposed a "Roadmap for Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards [IFRS] by U.S. Issuers." The SEC road map detailed a process and a set of milestones by which certain larger public companies (those with a public float of at least $700 million) in the United States would transition from financial reporting based on U. S Generally Accepted Accounting Principles (GAAP) to that based on 3FRS beginning in 2014, with smaller public companies adopting IFRS in 2015 and 2016. Based on the timeline contained in the proposed road map, if large public companies make their filings for 2014, they would be required to include balance sheets for December 31, 2013, and December 31, 2014, and income statements, cash flow statements, and statements of changes in stockholders' equity for the years ended on December 31, 2012, 2013, and 2014. In addition, the International Accounting Standards Board (IASB) requires companies adopting IFRS for the first time to present the beginning balance sheet as of the date of transition (i.e., January 1, 2012). Therefore, IFRS adoption by 2014 really means a transition starting as early as January 1, 2012. Is it possible? After the SEC issued its proposed road map for public comment in November 2008, more than 200 comment letters were submitted from a wide variety of market participants, including those representing investors, regulators, issuers, accounting, legal, and other professions, as well as members of academia, standards setters, and international organizations. Those comment letters, along with survey results, could affect the SEC's decision regarding incorporating H7RS into the financial reporting system by 2014. On February 24, 2010, the SEC published a statement regarding feedback to the comment letters and survey results, and restated the commission's strong commitment to a single set of global standards. The SEC's statement also changed the expectation of the proposed timeline from 2014 to 2015 or 2016, as there is strong opinion that a successful transition needs approximately four to five years of preparation time. This article analyzes survey results of targeted company executive officers, accounting professionals, and accounting educators to determine the readiness and the possibility of IFRS adoption by the originally proposed adoption date of 2014. The survey results show that most respondents believe that IFRS adoption should be postponed. Surveys of Executive Officers

Grant Thornton LLP conducts a biannual survey of senior financial executives. Its October 2009 survey obtained responses from 846 U.S. CFOs and senior comptrollers ("Survey of Senior Financial Executives," www.grantthornton.com/ cfosurvey). Exhibit 1 summarizes the results to the questions asked, including the first: "Do you believe the U.S. should require the use of IFRS?" Choices were: "Immediately, "In 3 to 5 years," "In 5 years or longer," and "Never." Responses were presented overall and broken down for public and private companies. The most popular choices were "In 3 to 5 years" and "Never," with financial executives from public companies preferring "In 3 to 5 years" and with those from private companies leaning toward "Never." Combining the responses for the last two choices, over 50% of the respondents selected "In 5 years or longer" and "Never." It is obvious from this survey that there is a great deal of concern about implementing IFRS by 2014. A second study that the authors examined was completed by Pricewaterhouse Coopers (PwC) ("IFRS Perspectives: An Executive Survey," December 2009, www.pwc.com/en_US/us/issues/ifrsreporting/assets/ifrs-perspective-execuüvesurvey.pdf). As part of its Barometer Survey program, PwC polled more than 100 CFOs or managing directors at U.S.based...
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