Monday, July 16, 2012

IASB Officials Regret Lack of SEC Staff Recommendation on Incorporation of IFRS into US Reporting System

Commenting on the SEC staff report on the incorporation of IFRS into the US financial reporting system, Michel Prada, Chair of the IFRS Foundation, the IASB oversight body, urged the SEC to resolve the continued uncertainty over the US commitment to global accounting standards. While recognizing the right of the SEC to determine the method and timing for US incorporation of IFRS, the Foundation regrets that the staff report was not accompanied by a recommended action plan for the SEC. Citing both the achievements of the IASB-FASB convergence program and the repeated calls of the G-20 for global accounting standards, Chairman Prada would welcome a clear action plan on US incorporation. 

The SEC staff report reiterates the many challenges that a large economy such as the United States faces when transitioning to IFRSs. But Chairman Prada noted that the challenges facing the US are similar to challenges that other jurisdictions have successfully overcome when completing their own transition to IFRSs.The Foundation Trustees will carefully study the report in detail and take further steps as necessary. Their initial assessment is that many of the findings are broadly consistent with the conclusions of the Monitoring Board and Trustees’ respective Governance and Strategy Reviews completed earlier in the year, noted Chairman Prada, and are already addressed in the work plan for 2012. 

In his comments on the SEC staff report, IASB Chair Hans Hoogervorst emphasized that now is the right time to come on board and participate in shaping the future of global accounting. This is a pivotal moment for the IASB, he said, as the Board begins work on a new agenda. The era of convergence is coming to an end, he declared, and the Board is revamping its institutional infrastructure to provide for a more inclusive approach to international standard setting. IFRS have already achieved critical mass as international standards with more than two thirds of the G-20 now on board, he observed, and the momentum behind them becoming global accounting standards is irreversible.