Robert Herz, FASB chairman, estimated this week that a convergence of U.S. GAAP with the International Reporting Standards (IFRS) would not occur for 10 to 15 years, the Ohio Society of CPAs is reporting. Herz made the prediction at a meeting of the Financial Crisis Advisory Group (FCAG), a joint body assembled by FASB and the International Accounting Standards Board (IASB) to provide financial reporting advice in light of the current credit crisis.
Herz's projection came on the same day the comment period closed on the SEC's proposed Roadmap for the potential use of financial statements prepared in accordance with IFRS. The timeline for a full convergence in the proposed roadmap is 2011, with a mandatory filing for all public companies required in 2014.
The SEC extended the comment period for the proposed roadmap in January after receiving just 35 comment letters – many those requesting an extension.
The proposed roadmap was one of the final projects completed by former SEC chair Christopher Cox. His successor, Mary Schapiro, has been silent regarding her views on the proposed roadmap, after initially questioning the roadmap during confirmation hearings.
Given Schapiro's initial critical view of the roadmap and Herz’s outlook on the likelihood of settling on a date certain, companies are dealing with greater uncertainty regarding investing in an IFRS roadmap that may or may not proceed as currently outlined. Both the SEC and FASB have been silent but diligent in reprioritizing their staff’s efforts to focus on the current credit crisis and mortgage meltdown.
FCAG attendees were surprised with Herz’s estimate for the convergence timeline. There is speculation that reluctance in the U.S. to "flick the switch" is stunting IFRS development and "there will be pressure to cut the U.S. loose" from the process. Harvey Goldschmid, a former SEC commissioner and FCAG co-chair noted that the U.S. must "get on or off the train."