The buzz surrounding International Financial Reporting Standards (IFRS) adoption in the United States, once a hot topic, has waned significantly in the past few years.
In August of 2008, the SEC proposed a roadmap outlining the transition to IFRS, which targeted the year 2014 as a deadline. Almost six months into 2014, no clear path has been determined as to when the complete transition can be expected to occur.
In July of 2012, the SEC released the Final Staff Report on the Work Plan for the Consideration of Incorporating International Financial Reporting Standards Into the Financial Reporting System for U.S. Issuers. The report covered various topics:
- The sufficient development and application of IFRS for the U.S. domestic reporting system
- Independent standard setting for the benefit of investors
- Oversight, composition, and funding of the IFRS Foundation
- Investor understanding and education regarding IFRS
The report did not, however, specify any recommendations to the SEC, or narrow in on a timeline for adoption.
Among the concerns detailed in the Staff Report:
- After reviewing a number of financials prepared in accordance with IFRS, the SEC noted that in general they complied with those standards, yet there were still opportunities for the global application to be improved in order to narrow diversity in the application and practice of those standards.
- The report mentioned the difficulty that the IFRS Foundation Trustees have had in obtaining the funding for the portion of the International Accounting Standards Board (IASB) budget allocated to the United States.
Earlier this year, the SEC released their Strategic Plan for fiscal years 2014-2018. In addition to the seeming lack of support for IFRS in the 2012 Staff Report, this plan avoids a clear direction and appears to point further towards the delayed adoption of a global set of accounting standards.
The plan states that “due to the increasingly global nature of the capital markets, the agency will work to promote higher quality financial reporting worldwide and will consider, among other things, whether a single set of high-quality global accounting standards is achievable.” The plan is a slight departure from the previously released Strategic Plan for fiscal years 2010-2015, which offered more direct support for international standards. This plan stated that “the agency will promote higher quality financial reporting worldwide through, among other things, support for a single set of high-quality global accounting standards, and promotion of the ongoing convergence initiatives between the FASB and the International Accounting Standards Board”. The language has changed from a definitive support and promotion of a single set of standards to what appears to be an uncommitted consideration about whether a single set of standards is even achievable.
At this point in time, it appears what once was a priority has since taken a back seat to other topics of concern. Will we ever be required to report under IFRS in the United States? That question is likely to go unanswered for some time.