IFRS in the U.S. raises questions: 'convergence' or 'conversion?'.

• Author: Heffes, Ellen M.
• Position: Financial reporting - International Financial Reporting Standards - Securities and Exchange Commission - Law overview

This IFRS section summarizes key points from the comment letters received by the U.S. Securities and Exchange Commission about its Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers, which was released last November. Comments were originally due on Feb. 19, but the deadline was extended to April 20.

This is compiled by IFRS Section Co-Developer Cheryl Graziano, who compared several analyses from "Big Four" firms, FEI's and other and SEC comment letters. As of press time, the SEC has been silent on the subject, leaving speculation on whether and when a move from U.S. generally accepted accounting principles will occur, particularly within the timeframe outlined in the roadmap.

Following the end of the public comment period for the SEC's International Financial Reporting Standards roadmap, nine additional comments were filed after the deadline, with a total of 279 letters filed since the proposed rule was released late last year.

Since that time, it could be said a sea change has occurred in the enthusiasm around United States adoption of IFRS. In addition to a new president and SEC commissioner, the global economic crisis has undoubtedly pushed IFRS further down the priority lists of many concerned.

This is evident in comment letters on the roadmap as summarized by three separate analyses. The first of these, conducted by PricewaterhouseCoopers, reviews 204 of the comment letters. Based on its review, PwC found that a single set of global accounting standards was supported by 84 percent.

In the comment letter review conducted by this author, those who commented on the early adoption generally agreed that the current roadmap deters 2009 adoption because of the possible reversion back to U.S. GAAP before a 2011 decision is made to go forward by the SEC.

Beyond those points, consensus disappears, as many respondents had diverging views on whether a global set of standards would be more effectively achieved through International Accounting Standards Board and Financial Accounting Standards Board standard-setting convergence or through mandated time-specific conversion to IFRS.

A Continuum

Responses to the roadmap can be characterized as falling on a continuum with full convergence at one end and a mandatory adoption date at the other end. To illustrate, the PwC survey identified three broad approaches to IFRS for U.S. companies: full convergence of IASB...