SEC’s Decision on Adoption of IFRS Not Likely to be Fulfilled Soon
The US Securities and Exchange Commission (SEC) has clarified that the much awaited decision on when and if the United States will be adopting IFRS is not going to be fulfilled that easily and quickly.
SEC has not been able to achieve successes in its attempt to put an end to speculation regarding conforming to global reporting standards because its final staff report on its IFRS work plan will not include any recommendation on whether to shift from United States GAAP accounting to IFRS rules or not.
On the other hand, the absence of a definite timeline on when the US regulators will make a decision, has given rise to fears expressed by IASB Chairman, Hans Hoogervorst, at the beginning of 2012. Hoogervorst had noted that the process of replacing US GAAP with international accounting standards could be very similar to ‘Chinese water torture’.
Addressing the Economist CFO Summit in the month of March, Hoogervorst stated that James Kroeker, SEC’s chief accountant was very positive and sure that United States would adopt IFRS. James who had joined the SEC as a deputy chief accountant in the year 2007, however, recently announced that he will be stepping down this month and go back to the private sector.
The regulators in United States are presently trying to deal with the behemoth Dodd-Frank Wall Street reform, especially the Volcker Rule, which is very complex and had placed trading related restrictions on financial organizations.
The path towards convergence has been a tortuous one. Essentially having begun in 2002, real progress seemed to have been made when, in 2010, the SEC directed staff to conduct an analysis of all the issues related to switching between US GAAP and IFRS, with a decision expected in 2011 But the differences between IASB and FASB on some of the standards emerged as a hindrance to progress.
At present, both IASB and FASB are working on numerous projects related to leasing, financial instruments, insurance and revenue recognition and it is only after these projects come to an end, sometime in the mid of 2013, that the convergence program will also see its conclusion.