AICPA says U.S. companies should have option to use IFRS as issued by IASB

By Anne Rosivach
 
Barry Melancon, American Institute of Certified Public Accountants (AICPA) president and CEO, and Paul Stahlin, AICPA chairman, stated in their letter dated August 17 to the Securities and Exchange Commission (SEC), that public companies in the United States should be allowed the option of adopting use of International Financial Reporting Standards (IFRS) as the SEC weighs a possible future framework for incorporating IFRS into the U.S. financial reporting system. Melancon and Stahlin wrote, "We believe U.S. issuers should be given the option to adopt IFRS as issued by the IASB."
 
The SEC is expected to decide later this year whether, and if so, how, public companies in this country should incorporate IFRS into their financial reporting. If the SEC decides to accept IFRS for U.S. issuers, it must decide whether to accept the timetables of the IASB and the Financial Reporting Standards Board (FASB) convergence projects or to use a convergence/endorsement model proposed by the SEC staff. The SEC model assumes the ongoing use of both IFRS and U.S. GAAP. It also will be necessary for the commission to decide how to incorporate future IFRS into U.S. GAAP.
 
The AICPA letter suggested that the IFRS option would not introduce complexity into what is already a very complex issue: "Anecdotal evidence suggests that the number of companies that would choose such an option would not be such that system-wide readiness would become an issue."
 
Melancon and Stahlin stated, "The AICPA supports the goal of a single set of high-quality, comprehensive financial reporting standards to be used by public companies in the preparation of transparent and comparable financial reports throughout the world. . . . We believe the standards issued by the IASB are best positioned to become those global standards. We, therefore, agree with the objective outlined in the Staff Paper that a U.S. issuer compliant with U.S. GAAP should also be able to represent that it is compliant with IFRS as issued by the IASB."
 
Going forward, during a transition period and beyond, the AICPA said that it "supports prospective application of the endorsed standards wherever possible. . . . Accordingly, after completion of the MoU priority projects, we recommend an endorsement process that would incorporate IFRS not subject to standard setting into U.S. GAAP for public companies at one point in time, with a date certain for adoption."
 
Melancon and Stahlin added that "any transition to IFRS in the United States needs to be a comprehensive undertaking. If IFRS are to serve as a basis for U.S. issuers financial reporting, there must be changes in the auditing and regulatory environments."
 
The letter also stated, "A central theme of the Staff Paper is the retention of U.S. GAAP and incorporation of IFRS into the Accounting Standards Codification through an endorsement process. The framework as outlined in the paper would directly affect U.S. GAAP for public and private entities, so this issue needs to be addressed. As it relates to private companies, we support the recommendations of the Blue Ribbon Panel on Private Company Financial Reporting for establishment of a separate board for developing exceptions and modifications to current U.S. GAAP for private companies. If a separate board was established, the FASB could focus on the endorsement of IFRS into the U.S. financial reporting system for public companies in a more effective and efficient way."
 
The AICPA letter was written in response to the SEC Staff Paper, "Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers – Exploring a Possible Method of Incorporation," which was issued in May.
 
Related article

You may like these other stories...

Regulators struggle with conflicts in credit ratings and auditsThe Public Company Accounting Oversight Board (PCAOB), which was created by the Sarbanes-Oxley Act in 2002, released its third annual report on audits of...
Regulatory compliance, risk management and cost-cutting are the big heartburn issues for finance execs in the C-suite. Yet financial planning and analysis—a key antacid—is insufficient.That's just one of the...
A review of Financial Accounting Standards Board (FASB) guidance on share-based payment transactions found that the 2004 standard achieves its purpose and provides useful information to investors and other users of financial...

Already a member? log in here.

Upcoming CPE Webinars

Aug 26
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.