In 2011, the U.S. Securities and Exchange Commission (SEC) will decide whether to require, allow, or continue to forbid the use of International Financial Reporting Standards (IFRS) by public U.S. companies in their SEC filings. We'll also see new accounting standards for revenue, leases, and financial instruments introduced into IFRS and U.S. Generally Accepted Accounting Principles (GAAP) – standards that will be the same in both IFRS and U.S. GAAP but unlike any currently found in either set of standards. Meanwhile, both public and private U.S. companies that participate in the global economy will increasingly find themselves having to use current IFRS in addition to—not instead of—current U.S. GAAP in order to meet statutory financial reporting requirements imposed by other countries.
Unfortunately, all of these developments will take place in the absence of a consensus on public-policy goals with regard to the accounting standards used by U.S. companies. And the more decisions that standard-setters and regulators make in the absence of such a consensus, the less those decisions are likely to be aligned with the public interest.
Over the past year-and-a-half, I've blogged about the role that IFRS can and should play in the future of financial reporting in the United States. One thing I remain convinced of is that neither a conversion to current IFRS nor the continued use of current U.S. GAAP is an appropriate public-policy goal for the United States. Fortunately, we have more and better options to choose from—for example, the "single-sandbox" approach that I have advocated in my last few posts. Both IFRS and U.S. GAAP would play key roles in that approach as they evolve over time.
There won't be much more to say about IFRS from a U.S. perspective for a while, so I'm taking a break from this blog. Throughout 2011, I'll be rethinking the blog's focus with an eye toward relaunching it late in the year. Thanks to everyone for reading over the past 18 months. You can still catch me writing about financial reporting in my columns for CFO.com and Strategic Finance magazine.