Earlier today, Financial Executives International (FEI), a leading association of senior financial executives, sent a comment letter to the U.S. Securities and Exchange Commission, formally requesting the SEC to consider extending the comment period on its proposed “Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards” (the “IFRS Roadmap”). FEI’s comment letter asks the SEC to consider formally extending the comment period - currently slated to close on February 19 - by an additional 45 days. The letter, signed by Christine DiFabio, FEI’s Vice President, Technical Activities, notes:
- The Roadmap is a critical document which requires significant focus and attention to ensure the proper and complete analysis of all of the issues. The potential transition to International Financial Reporting Standards is much more extensive than simply an adoption of new accounting and reporting standards, but represents a transformation impacting a company’s entire organization and must be considered carefully.
Our membership as well as our technical committees are mindful of the importance of this proposal and want to provide as thorough and constructive an analysis as possible to assist the SEC in their decision making in this area. Many, if not most of our FEI member companies are calendar year registrants, and are thus in the midst of finalizing their 2009 10-K filings. With a reporting season that is uniquely challenges by the economic crisis, companies are finding it difficult to dedicate the necessary time and analysis to the questions asked in the Roadmap, while focusing on continuing to provide accurate and transparent information to their shareholders in this difficult time. FEI believes that an extended comment period will significantly increase the number and level of detail of the responses provided for such a significant proposal.
Less than 20 comment letters have been filed with the SEC on the IFRS roadmap as of January 19, as shown on SEC’s comment letters page.
Separately, CFO.com’s Marie Leone reports today in an article entitled Will a Tortoise Pace Win the Global Accounting Race:
- Staffers from President Obama's transition team called the Financial Accounting Standards Board before the new president took office to ask for updates on current projects. That's standard operating procedure for an incoming administration, but it is nice to know that accounting issues were on some White House agenda before the new president took office. It also probably means that the administration, via the Securities and Exchange Commission, will be announcing its new list of priorities sooner than later.
- Referencing remarks made by SEC staffer Allison Patti at the New York State Society of CPAs (NYSSCPAs) 2009 SEC/FASB/PCAOB conference, Leone reports:
"The change in administration may mean we are taking a different route [to international financial reporting standards]," noted Allison Patti, an official from the SEC's Office of the Chief Accountant, at an industry meeting.
She said that the SEC has no official position on the matter, but based on the congressional testimony of Mary Schapiro, the president's pick to head the SEC, it makes sense to slow down the SEC timetable of moving American companies off of U.S. generally accepted accounting principles and onto IFRS. In that way, the SEC can make sure all the implications are studied and the opinions of stakeholders are considered.
- While Schapiro appears to favor slowing the process down, Obama economic advisor Paul Volcker, a former chairman of the Federal Reserve board, delivered a ringing endorsement of IFRS this week, as part of a reworked regulatory system.
Despite a push from Volcker however, the tortoise approach may win out over a hare approach in the race to international standards. Indeed, no matter what the SEC decides, universities and colleges are ill-prepared to teach IFRS to burgeoning accountants and veteran accounting practitioners have little knowledge of the rules, and not many places to retrain.
The AICPA has posted a number of IFRS resources at http://www.ifrs.com/, including an IFRS Blog.
Private companies, meantime, are awaiting the issuance of IFRS for Private Entities, which the IASB previously announced is expected to be issued in first quarter, 2009.
An interesting question will arise in the U.S. as to whether public companies will one day be permitted or required by the SEC to report in IFRS – whether that will leave two – U.S. GAAP and full IFRS as published by the IASB – or three possible bases of reporting in the U.S. – with some private companies in the U.S. and elsewhere potentially being interested in adopting IASB’s simplified IFRS for Private Entities – a condensed version of IFRS, with previous drafts weighing in at around 250 pages, vs. 2500 pages of complete IFRS, and about 25,000 comparable pages of U.S. GAAP. These statistics have been floating around for a couple of years, reiterated recently by IASB Chairman David Tweedie in an interview with the NYT’s Floyd Norris, as cited in the NYSSCPA’s Blog, in this January 7 post by Cara Patterson, IFRS: Resistance is Futile.
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