FEI Comm. on Corp Reporting (CCR) Writes FASB, IASB About Impact of MOU Standards
On May 7, FEI's Committee on Corporate Reporting sent a letter (see: CCR letter) to Robert Herz, Chairman of the Financial Accounting Standards Board, and Sir David Tweedie, Chairman of the International Accounting Standards Board, expressing concern about the impact and timing of the 10+ standards set to come out by June, 2011 under the FASB-IASB Memorandum of Understanding.
The letter, signed by CCR Chairman Arnie Hanish, stated, in part:
"Collectively, we do not believe we have sufficient technical resources in industry to respond effectively to such a large quantity of complex proposals issued over a very short period of time. Even if it were not so, it is not clear to us that the FASB and IASB have the requisite resources to absorb and resolve all of the issues that would be posed by all of these proposed standards in such a compressed time period."
The CCR letter continued:
"We also note that if we are not able to fully analyze and comment on these proposals, they could end up being finalized without the necessary analysis that our comments relative to real-life transactions, or with limited comments, leading to a large number of implementation issues and potentially significant amendments to the newly issued standards. We make these observations based on experiences with other major, complex standards, such as FIN 46 on Variable Interest Entities. Due to the very abbreviated time frame between issuance of the ED, issuance of the final standard and its effective date, the principles that were fundamental to operation of the standard needed to be amended through issuance of a revised standard (FIN 46R) and a series of subsequent FASB Staff Positions. If that were to occur with these standards, we do not think that type of process would be helpful to investors or preparers.
We note that a separate committee of FEI, FEI’s Committee on Private Companies-Standards, shares our concern and has filed a separate comment letter on this point." [NOTE: See our previous post on the CPC-S letter to FASB.]
In conclusion, Hanish stated:
"We recommend that the FASB identify a representative group of preparers, auditors and financial statement users to identify logical groupings of revised standards and a timetable for the completion of each group that would avoid the
types of issues we describe above. We would be pleased to provide representatives to serve on such a group."
Read more in the CCR letter.
SEC Workplan and the Convergence Process
In her opening remarks at the SEC's Feb. 24, 2010 open meeting, at which the Commission voted to release a Commission Statement in Support of Convergence and Global Accounting Standards (including a related staff Work Plan), SEC Chairman Mary Schapiro stated:
Today's Commission statement reaffirms our support for a single globally-accepted standard, describes the issues that need to be further examined and analyzed, and lays out the events that must occur between now and 2011. Specifically, the convergence projects currently underway between the FASB and the International Accounting Standards Board, must first be successfully completed. And our staff must gather information to aid the Commission as it evaluates the impact that the use of IFRS by U.S. companies would have on our securities market. To this end, we have asked the staff to develop and execute a work plan, which the staff will discuss in more depth in a moment.
In 2011, upon conclusion of the fact-gathering and analysis set forth in the work plan — and assuming completion of the convergence projects — the Commission will then be in a position to determine whether to incorporate IFRS into the financial reporting system for U.S. public companies. Until that time, we will
expect staff to provide periodic written public reports to the Commission on the
progress of its efforts.
More recently, there has been speculation about whether 100% completion of the convergence projects laid out in the FASB-IASB MOU must be completed by June, 2011 to meet the goals in the SEC's Work Plan (not to mention the goal set forth last September by the G-20 Leaders). Some related reading can found in:
- "SEC Chief Accountant Says Convergence Need Not Be Completed By 2011," by Matthew Lamoreaux, AICPA Journal of Accountancy, April 27.
- "SEC's No-Rush Stance on IFRS Means A Nice Stroll Toward Convergence, You Know, Whenever," by Adrienne Gonzalez in Going Concern, April 28.
- "U.S. Seeks Secure Funding of Global Accounting Board," by Emily Chasan of Reuters, April 29.