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March 17, 2011

US companies brace for IFRS challenge

Eight out of ten senior accountants expect to
see IFRS adopted in the US in 2015 or later, according to a PwC US
study.

PwC surveyed 1,400 chief financial officers,
chief accounting officers, controllers and managing directors on
the potential effects of IFRS in the US.

Respondents said the adoption of the IFRS will
have a significant impact on lease accounting, revenue recognition
and financial instruments.

Sixty percent of respondents account for their
leases manually by using spreadsheets. PwC said this presents
significant challenges in data gathering, data accuracy and
internal controls when the new standards come into place.

“New rules are expected to affect an estimated
$1.2 trillion in gross lease obligations,” PwC said.

Half of the survey respondents expect IFRS to
impact on the amount or timing of reported revenue recognition for
their company.

“One of the greatest areas of significance for
respondents was the possibility that full retrospective application
would be required,” PwC said.

The majority of respondents who had performed
an analysis of the likely impact of the financial instruments
proposals expect an increase in the use of fair value and,
consequently, increased income statement volatility.

“US financial reporting will undergo an
unprecedented level of change within the next several years and
companies can minimise disruption by starting now to raise
organisational awareness and evaluate the impact convergence will
have,” PwC convergence and IFRS leader James Kaiser said.

 

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