Some large US public companies
could be filing financial statements in IFRS as early as 2010 if a
convergence road map proposed by the US Securities and Exchange
Commission (SEC) is accepted.

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