Some PwC partners recommend putting the kibosh on further FASB-IASB ‘convergence’ efforts in favor of focusing on IFRS directly, as reported by Denise Lugo in her article, “PricewaterhouseCoopers Panelists Say SEC Should Nix Accounting Convergence,” in today’s BNA Daily Report for Executives.
BNA's Lugo noted that PwC’s National IFRS partner, David Schmid, said on a PwC IFRS webcast yesterday that PwC supported the original Memorandum of Understanding (MOU) between the FASB and IASB dating back to 2002 (last updated in 2006, with another update expected this fall) in which the two standard setters agreed to converge their standards by 2011.
However, Lugo notes: “Now that the SEC has discussed its proposed road map for U.S. adoption of international financial reporting standards, the Big Four accounting firm [PwC] no longer supports the concept of convergence.”
“’It's taking too long, it's too hard to do, and it didn't work,’ Schmid said about progress on the MOU,” according to Lugo. She notes that in light of the upcoming release of SEC’s proposed IFRS Roadmap, Schmid told the webcast, “it's no longer the time to focus on convergence… We want the FASB and the SEC to focus less on U.S. standards and focus on international accounting standards which we believe we will move to."
The idea of U.S. standard-setters focusing on IFRS in the short term and dropping the long-term detailed ‘convergence’ approach is not entirely foreign to those who have read FASB Chairman Robert Herz’ views on the path FASB is already headed down. As we noted in our post earlier this week (FASB Chairman on IFRS), FASB is already in favor of an ‘improve and adopt’ approach to IFRS, and is moving to adopt ‘identical’ standards to IFRS.
We believe an archived version of PwC’s Sept. 4 IFRS webcast will be posted (meantime you can see PwC’s Aug. 21 webcast on IFRS and Taxes), and here are more IFRS Reporting Resources from PwC.
EU Acceptance of U.S. Co’s Filings in IFRS vs. U.S. GAAP is a Consideration, Too
In addition to domestic impact questions on the use of IFRS here in the U.S., the approach to converging with IFRS - or directly adopting IFRS - is particularly relevant to U.S. companies that are listed, and therefore have to file financial statements with regulators or stock exchanges in, the EU.
On June 11, 2008 the European Commission released “Commission proposals regarding third country GAAPs in the EU as from 2009.” Highlights are below (numbers in parentheses refer to paragraph numbers in the proposal; references to “Commission” are to the European Commission, references to “Community” are the European Community):
“(6) In December 2007 the Commission consulted the Committee of European Securities Regulators (CESR) with regard to the technical assessment of the equivalence of the GAAP of the United States, China and Japan. In March 2008 the Commission extended the consultation with regard to the GAAP of South Korea, Canada and India.
(7) In its advice [delivered in March, May 2008 and in … respectively], CESR recommended finding US GAAP and Japanese GAAP equivalent to IFRS for use within the Community. Furthermore, CESR recommended the acceptance of financial statements using GAAPs of China, Canada and South Korea within the Community on a temporary basis, until no longer than 31 December 2011.
(8) In 2006 the United States' Financial Accounting Standards Board and the IASB concluded a Memorandum of Understanding which reaffirmed their objective of convergence between US GAAP and IFRS and outlined the work programme for this purpose. As a result of this work programme many major differences between US GAAP and IFRS have been resolved. In addition, following the dialogue between the Commission and the US Securities and Exchange Commission, reconciliation for Community issuers which prepare their financial statements according to IFRS is no longer required. Therefore, it is appropriate to consider US GAAP equivalent to adopted IFRS from 1 January 2009.”
If a full stop were to be placed on the FASB-IASB MOU as some are suggesting, would that impact the European Commission’s recent proposals to accept U.S. GAAP fillings in the EU noted above? Or would that question be moot if the SEC mandates IFRS in the U.S. at some date certain as suggested in its proposed IFRS Roadmap approved for release for public comment at SEC’s Aug. 27 meeting. We still await posting of SEC’s proposed IFRS Roadmap… the SEC just posted another item approved for release at its Aug. 27 meeting, a final rule on exemption from registration for foreign filers.
IFRS Challenges to College Faculty, Curriculum, Cited in KPMG-AAA Survey
According to survey results released yesterday, “Relatively few universities currently have a strategy in place to incorporate [IFRS] into accounting curricula in the 2008-2009 academic year.” Additionally, “the first class of graduating seniors likely to have a substantial amount of IFRS education will be the class of 2011, according to 30 percent of the professors [surveyed], followed by the class of 2012, at 24 percent. Only five percent of the respondents expect the Class of 2009 to have substantial knowledge of IFRS, and 17 percent say it will be the class of 2010. Those views are in line with the fact that 42 percent of the professors felt that textbooks would not be ready until the 2010-2011 academic year.”
These are just a few highlights from the KPMG LLP – American Accounting Association (AAA) IFRS Faculty Survey results released yesterday; we provide more highlights and a link to the full survey results in this FEI summary. If you received this post from 'a friend' and would like to get the FEI blog by email, you can sign up here.
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