On February 24, 2010, the SEC voted to issue a Statement that lays out its position regarding global accounting standards and makes clear that the SEC continues to believe that a single set of high-quality, globally accepted accounting standards would benefit U.S. investors. The Statement notes that the SEC continues to encourage the convergence of U.S. Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS) in order to narrow the differences between the two sets of standards.
The SEC also directed its staff to execute a Work Plan, the results of which will aid the SEC in its evaluation of the impact that the use of IFRS by U.S. companies would have on the U.S. securities market. By 2011, assuming completion of these convergence projects and the staff’s Work Plan, the SEC will decide whether to incorporate IFRS into the U.S. financial reporting system, and if so, when and how.
Among other things, the staff’s Work Plan will address the following issues:
- determining whether IFRS is sufficiently developed and consistent in application for use as the single set of accounting standards in the U.S. reporting system
- ensuring that IFRS will be set by an independent standard-setter
- understanding whether U.S. laws or regulations (outside of the securities laws), for example tax laws and regulatory reporting, would be affected by a change in accounting standards
- understanding the impact that adoption of IFRS would have on companies, including changes to accounting systems, changes to contractual arrangements, corporate governance considerations and litigation contingencies
- determining whether companies and outside accountants are sufficiently prepared to make the conversion to IFRS
The SEC staff will provide public progress reports on the Work Plan, as well as the status of the FASB and IASB convergence projects, beginning no later than October 2010.