Wednesday, March 11, 2009

NYSE's Niederauer Warns: Don’t Let IFRS Become The Next Sarbanes-Oxley

In a keynote address on March 11, 2009 at the U.S. Chamber of Commerce 3rd Annual Capital Markets Summit, NYSE-Euronext Chairman Duncan Niederauer raised some cautions about a potential move of U.S. companies to International Financial Reporting Standards (IFRS) as contemplated in the U.S. Securities and Exchange Commission’s Proposed IFRS Roadmap, released for public comment in November, 2008. (NOTE: SEC’s comment deadline is April 20; see the comment file.)

“We should not allow the transition to IFRS to become the next Sarbanes-Oxley,” Niederauer told the Chamber conference, adding “it cannot be the accounting firms’ next big opportunity which they turned Sarbanes-Oxley into… and it cannot be a bane for small companies.”

He observed, “A lot of people do studies that say it doesn’t cost much for small companies [to implement IFRS].” However, he noted many of the NYSE-Euronext issuers are small companies, adding, “let me tell you… it costs a lot more than what the acdemics’ studies say.” [On the subject of academic studies, the comment letter filed by FASB and its parent foundation, the FAF on the SEC’s proposed IFRS roadmap included 2 academic studies, see link to their letter below.]

He also noted that the cost of implementation or transition to IFRS is usually “much more” than what a company may be quoted initially by an audit firm.

NOTE: Neiderauer recommended more specific types of focused action in a variety of regulatory areas. Hear more of his ideas by seeing his keynote at FEI’s Summit conference May 4-5 at the Gaylord Texan Resort in Grapevine, Texas. (If you become a new member of FEI by April 6, you can attend our Summit conference for free-includes free CPE! Email me if you’d like more info on FEI membership or our Summit conference eorenstein@financialexecutives.org.)
More IFRS NewsIn other IFRS news, the Financial Accounting Standards Board and its parent, the Financial Accounting Foundation, posted its comment letter on March 11 on the SEC’s proposed IFRs Roadmap. (See FAF-FASB comment letter on IFRS Roadmap)

Among other prominent organizations filing comment letters recently was the New York State Society of CPAs. (See NYSSCPAs letter on IFRS Roadmap).

Separately, FEI’s research affiliate, the Financial Executives Research Foundation (FERF) published a new study on March 9, entitled: International Financial Reporting Standards: A Project Plan for U.S. Companies.

The report, released by FERF in conjunction with Resources Global Professionals, notes: “While many financial executives have begun the initial stages of convergence with International Financial Reporting Standards, early adoption in 2009 for qualifying companies will be difficult, if not impossible, due to the significant time requirements.”

The new study is the first in an information series FERF is publishing to provide practical professional education on IFRS. The data for the study was primarily compiled from a gathering of representatives from 30 U.S.-based public companies during which the discussion focused on challenges and best practices related to IFRS. Read more about the new report in this FEI press release and download the report from FERF’s bookstore.

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