A Securities and Exchange Commission staff report detailed research and analysis still to be done as the SEC considers whether, when and how to allow U.S. domestic issuers to use IFRS. The report, issued on Friday, describes progress under its IFRS work plan.
In the recently released IFRS Progress Report , the SEC staff details its progress thus far and remaining research and analysis to be done as the commission considers whether, when and how to allow domestic issuers in the U.S. to use IFRS.
The SEC staff’s first update draws no major conclusions. It highlights concerns among regulators that now rely on U.S. GAAP as a basis for their reporting regimes about the impact of a shift to IFRS and worries over the funding mechanism for the International Accounting Standards Board (IASB).
The 44-page report details staff efforts and its list of to dos across six major areas the commission is weighing.
- Development of IFRS for the U.S. domestic reporting system
- Independence of standard setting
- Investor understanding and education regarding IFRS
- Examination of the U.S. regulatory environment that would be affected by a change in accounting standards
- The impact on issuers, such as changes to accounting systems and contractual arrangements
- Human capital readiness
Earlier this year, the commission signaled that it would make a determination in 2011 about the use of global standards by U.S. public companies following completion of the SEC’s IFRS work plan and the convergence projects agreed to by FASB and the IASB.
The SEC has stressed the importance of having a well-funded standard setter with a governance structure to support the independent development of global standards for the “ultimate benefit of investors.” According to the progress report, the SEC staff is analyzing how the IASB and its parent organization, the IFRS Foundation, are funded through review of “publicly available data and outreach to foreign regulators.”
The assessment will involve current, planned and proposed funding mechanisms. The staff is also in the process of considering a range of possibilities with respect to contributions to the IFRS Foundation and the IASB from the United States.
“Based on current existing funding commitments, the IFRS Foundation has indicated that it could be in an operating deficit for fiscal year 2010,” the progress report states. “In addition, the IFRS Foundation indicated it could expect a $4 million funding ‘gap’ with respect to its self-determined contribution target for the United States.”
Read more on Journal of Accountancy : Download the Report
