U.S. Securities and Exchange Commission Response to IFRS

Later, senior officials with the SEC indicated that if the IASB and FASB make adequate progress in converging their standards, and if adequate progress is made in generating an infrastructure for interpreting and enforcing accounting standards, the SEC would look at permitting foreign registrants to file in the United States utilizing IFRS with no reconciling to U.S. GAAP.

In 2005, the SEC issued a “roadmap” setting out the steps for eliminating the requirement to reconcile IFRS to U.S. GAAP. The SEC roadmap reaffirmed that adequate convergence must have been accomplished between the two sets of standards and that the SEC has confidence in auditing and enforcement practices. The SEC along with the EU Commission (discussed next) signed an agreement on the roadmap later that very same year. In 2006, the FASB and IASB signed a memorandum of understanding on how they will attain convergence between U.S. GAAP and IFRS in order for the SEC to eradicate the reconciliation requirement. This memorandum of understanding is essentially their own roadmap containing a “to do” list and milestones for achieving equivalence in between the two sets of standards. In 2007, the SEC eliminated the reconciliation requirement for providers employing IFRS. The SEC’s decision indicates confidence in the quality and application of IFRS and inside the convergence method in between the FASB and IASB. The FASB/IASB memorandum of understanding was updated in 2008, setting out main convergence objectives to be accomplished by 2011.

The SEC is presently studying no matter whether to enable, or perhaps demand, U.S. firms to use IFRS. Opponents in the concept question no matter if principles-based IFRS will be workable within the litigious U.S. atmosphere. Opponents believe that U.S. interests are very best served by keeping U.S. GAAP for U.S. businesses and continuing the effort to converge U.S. GAAP and IFRS. They worry about accounting standards that are not “made in America.” Having said that, proponents argue that a single set of high-quality international standards will be the appropriate aim. They argue that IFRS will continue to boost over time and that the convergence process-already extended, difficult, and costly-is unlikely to be wholly prosperous in eliminating differences among U.S. GAAP and IFRS. An SEC proposal issued in 2008 could ultimately result in the mandatory transition to IFRS by U.S. registrants. (The originally proposed start out date of 2014 was later altered to 2015.)