SEC Chief Accountant Conrad Hewitt, speaking earlier today at FASB’s Forum on High Quality Global Accounting Standards, further amplified the status of SEC’s upcoming “IFRS Roadmap,” following on direct remarks on this topic by SEC Chairman Christopher Cox last week.
As background, in a speech at a CFA Institute conference last week, Cox said: “You have offered helpful insights on our Concept Release on whether, and under what circumstances, U.S. issuers should be allowed to prepare their financial statements using IFRS. That's a vitally important topic the Commission is scheduled to take up in the form of a proposed rulemaking later this summer."
At FASB's forum earlier today, SEC Chief Accountant Conrad Hewitt quoted Cox' statement above, and further clarified the SEC’s plan with respect to the IFRS roadmap.
Hewitt said: “We are working on that roadmap, if you think about a roadmap, every roadmap has a starting point, an ending point, origination, destination, within a given timeframe. The [IFRS] Roadmap concerns whether US companies should have the option to use IFRS."
Hewitt continued, “A roadmap should have milestones or benchmarks to guide the SEC to future decision to mandating IFRS.” He then detailed a list of milestones, including as relates to IASB governance and independence.
My personal take on Cox and Hewitt’s remarks, when looked at in combination, is: The SEC’s proposed IFRS roadmap may include the concurrent release of proposed rulemaking that would permit U.S. companies the option of reporting in IFRS instead of U.S. GAAP. (that is based mainly on Cox' comments above). I believe the accompanying roadmap will then include additional milestones which the SEC will want to see before it mandates IFRS for all, or a subset, of U.S. public companies, (based on Hewitt's comments cited above), including such issues as enhanced governance, funding, and independence of the IASB. The one linking concept I am not sure about is whether those companies electing optional IFRS adoption would be given a date certain by which they would have to adopt IFRS, or if the date certain would be more a ‘destination’ to be confirmed down the road after certain milestones on the long-term (3-5 year) roadmap are achieved.
FEI Supports High Quality Standards Promulgated by IASB; Forms Corporate Roundtable on International Financial Reporting
FEI President and CEO Michael P. Cangemi, speaking at today’s FASB Forum, noted that “FEI has been on the record supporting high quality international standards promulgated by the IASB.” He added “We were for the elimination of the reconciliation,” and, “we look forward to continuation of the debate, and applaud FASB for setting up the roundtable today.”
Half of FEI’s membership of senior financial executives work for public companies, and half work for private companies. In addition to addressing public company issues, Cangemi noted he looked forward to the discussion of private company issues that would take place during the afternoon sesson of FASB's Forum. (FASB board member Leslie Seidman, during opening remarks at todays' program, noted the morning session would focus on public companies, the afternoon session expanding to private company issues as well.)
Cangemi noted that the views of FEI’s public company members on IFRS are somewhat bifurcated, based on the size of companies and whether they have global operations. However he noted there is a shared interest in moving to one set of global standards.
Recognizing that not all companies have precisely the same view or state of readiness, Cangemi noted that at this time, “Our members, especially public companies, believe there should be a period during which there could be an option for our U.S. companies to use IFRS. We also see a big need for increased awareness." Noting FEI has sponsored two conferences on IFRS over the past year, he said a sign of increased awareness and interest in the subject was the fact that the most recent conference (last week) was sold out. Further details on FEI views can be seen in the comment letter filed by FEI's Committee on Corporate Reporting (CCR) on SEC's Concept Release last fall.
Additionally, as noted by Cangemi, FEI recently announced the formation of the Corporate Roundtable on International Financial Reporting (CFIFR), with charter members including FEI, Honeywell Corporation, Eli Lilly Company, and others. FEI is “hoping to expand the discussion and debate by inviting companies to join this broad based initiative, said Cangemi.
You can listen to the live webcast of the FASB forum, which is taking place right now, continuing through 4pm today.
[UPDATE: Additional details on the public company discussion can be found in this FEI summary, and details on the afternoon's private company discusison and closing remarks can be found in this FEI summary. (Note: summaries downloadable by FEI members only, see info on FEI membership.)] If you received this blog post from 'a friend' and would like to receive the blog directly by email, sign up here.
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We are working on that roadmap, if you think about a roadmap, every roadmap has a starting point, an ending point, origination, destination, within a given timeframe.
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