A Pause That Refreshes? Sizing Up Standard-Setting Efforts: In the ensuing years since the SEC first proposed the use of International Financial Reporting Standards (IFRS) by U.S. registrants in mid-2007, there’s been no shortage of economic drama. Both the pricking of the real estate bubble and the Great Recession struck within a year; amid the financial mayhem, the international convergence of accounting standards didn’t carry quite the same urgency it did originally.
Once relative calm was restored to the markets, however, the convergence efforts picked up steam once again. In the past twelve months, the International Accounting Standards Board and the Financial Accounting Standards Board have been issuing proposals at a blistering pace - proposals that, if they become actual standards, could have serious repercussions for the issuers of financial statements. Investors and other users would also have to deal with perhaps surprising amounts of changes. It’s reached the point where the FASB issued a discussion paper in late October for the sole purpose of taking stock of its various constituents’ views on how the Board should go about requiring the implementation of these potential standards. For instance: should they be phased in separately, or all implemented at one time? Should firms be allowed to adopt them early? How long of a grace period will be necessary?
In an interesting coincidence of timing, the SEC also issued an update on the progress made by the Office of the Chief Accountant in deciding whether or not to permit the use of IFRS for U.S. registrants. As it stands, the Commission expects to make a decision on that in 2011. (The Commission could conceivably decide to decide later.)
This report looks at the highlights of the two documents. For the moment, the two chief influencers on U.S accounting principles seem to be taking a breather - but they’re not finished the race, by any stretch of the imagination.