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 Both SEC and FASB Committed Global Standards Move Forward In late February, SEC
Chairman Mary Shapiro issued a statement affirming that the U.S. Securities
and Exchange Commission (SEC) continues to believe a single set of
high-quality globally accepted accounting standards would benefit U.S.
investors. The SEC also directed its staff to execute a Work Plan, the results of which will aid the Commission in evaluating the impact that the use of IFRS by U.S. companies would have on the U.S. securities market. Included in this Work Plan will be consideration of IFRS, as it exists today and after the completion of various "convergence projects" currently underway between U.S. and international accounting standards-setters. Aggressively pursuing global accounting standards, the Financial Accounting Standards Board and the International Accounting Standards Board (IASB) have intensified work efforts between the two boards on the convergence projects. “Whether we get there through convergence of standards, or through an SEC mandate, significant changes are coming – potentially very quickly,” said Jeffrey W. Hales, a research fellow with FASB. Hales spoke in January with MACPA Board members; and he will return to Michigan for a presentation at the Spring Members Advisory Symposium in May. FASB aims to complete important convergence projects in 2011 identified in a Memo of Understanding with the IASB. That means 2010 may be a pivotal year of progress. Hales suggested the FASB could issue significant exposure drafts as soon as June 2010, and ultimately vote on them in 2011.
What can MACPA members do to prepare? CPAs should take advantage of opportunities learn about the convergence projects, suggested Hales. “They need to be aware that change is on the horizon, and be prepared to change financial reporting systems and retrain staff members,” he added. “CPAs also can get involved in the process by reading exposure drafts, and writing comment letters,” said Hales. Educators can take advantage of this process as well, suggested Hales. “Educators and students can use this process as a great learning opportunity. They could look at the objectives of financial reporting as laid out within the Boards’ conceptual frameworks and discuss whether proposed changes reflect the objectives.” SEC Going Forward By 2011, assuming completion of FASB/IFRS convergence projects and the SEC staff's Work Plan, the Commission will decide whether to incorporate IFRS into the U.S. financial reporting system, and if so, when and how. In November 2008, the Commission proposed a series of milestones (also known as the Proposed Roadmap) that would guide the Commission in determining whether to transition U.S. capital markets to IFRS. After proposing the Roadmap, the Commission received more than 200 comment letters from a wide variety of market participants, including investors, regulators, issuers, accountants, attorneys, academia, standards setters, and international organizations. Comments indicated widespread support for the goal of having a single set of high quality globally accepted accounting standards, but views differed about the approach in the Proposed Roadmap. Therefore, the Commission's February statement indicates that it is important to carefully consider and deliberate whether such a change is in the best interest of U.S. investors and markets. The SEC staff will provide public progress reports on the Work Plan, as well as the status of the FASB and IASB convergence projects, beginning no later than October 2010 and frequently thereafter until the work is complete. Comments on the Proposed Roadmap included the view that U.S. companies would need approximately a four- to five-year timeframe to successfully implement a change in their financial reporting systems to incorporate IFRS. Therefore, if the Commission determines in 2011 to incorporate IFRS into the U.S. financial reporting system, the first time U.S. companies would report under such a system would be no earlier than 2015. The Work Plan would further evaluate this timeline.
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| PO Box 5068 Troy, MI 48007-5068 Phone: 248.267.3700 Fax: 248.267.3737 E-mail: macpa@michcpa.org | |
