The proposal involves moving the world’s largest economy from the use of US GAAP to the international standard by 2014. Last November, the regulator voted to allow foreign entities to file financial statements in the US using IFRS without reconciling with US GAAP – widely seen as the first step towards allowing US companies to use IFRS.
The SEC said it would make a decision in 2011 on whether to proceed with mandatory adoption for all companies. But as many as 110 qualifying companies could opt to begin using IFRS in fiscal years ending after 15 December 2009 – estimated to be around 14 percent of US market capitalisation. SEC chairman Christopher Cox said the increasing worldwide acceptance of financial reporting under IFRS, and US investors’ ownership of foreign securities, led the SEC to propose the “cautious and careful” plan. The multi-year road map, which will set out several milestones, has yet to be fully released. The SEC also proposes carrying out a staged mandatory adoption date beginning in 2014 for large accelerated filers, 2015 for accelerated filers and 2016 for non-accelerated filers.
Grant Thornton US managing partner for international client services Carol Banford told the International Accounting Bulletin she would not be surprised if the conversion dates are brought forward.
“I think once they see how these [110 qualifying] companies file … I think there will be more and more interest in moving this along at a faster pace,” she said.
DJ Gannon, a partner in Deloitte’s IFRS Solutions Centre, noted that since the debate has focused on public companies the impact of IFRS conversion on private companies had “gone under the radar screen”.
“What does this mean for the vast majority of US companies that are private companies? I think that is a whole other issue. This is not just about public companies; it is about private companies too,” he said.
Nicholas Moody and Carolyn Canham