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Home Advocacy Federal Issues Convergence of International and US Accounting Principles and IFRS

Federal Issues

Convergence of International and US Accounting Principles and IFRS 

In response to worldwide demand from regulators, investors, businesses, and auditing firms for a single set of high-quality, globally-accepted accounting standards, more than 100 countries currently allow publicly-held companies to use International Financial Reporting Standards (IFRS) set by the International Accounting Standards Board (IASB) in London.

The AICPA believes U.S. adoption of a single set of high-quality, globally accepted accounting standards will benefit U.S. financial markets and public companies by enabling preparation of transparent and comparable financial reports throughout the world. The AICPA is committed to providing the accounting profession with the information and tools, such as the Web site IFRS.com, needed to assimilate and implement a new set of standards.

The AICPA is engaged in a healthy debate at the Securities and Exchange Commission over the best way for the U.S. to adopt such standards, if applicable. Based on member surveys, the Institute believes that a three- to-five-year timeline will be required for public companies and the accounting profession to successfully transition to IFRS. As a result, the AICPA has urged the SEC to set a “date certain” for any future IFRS adoption provided that certain key milestones are achieved.

In the meantime, the AICPA supports continued “convergence” of specific accounting standards between IFRS and U.S. generally accepted accounting principles with the goal of substantial completion of work between the IASB and the Financial Accounting Standards Board (FASB) during 2013; a goal supported by the G-20.

The AICPA further supports a permanent, independent funding mechanism for the IFRS Foundation, the governing body of the IASB. The AICPA encourages the SEC to use part of the current levy on U.S. public companies for accounting standard setting activities as a U.S. funding contribution to the IASB.

SEC Authority

The Securities and Exchange Commission has statutory authority over accounting standards used by companies whose shares are publicly traded on U.S. exchanges such as the New York Stock Exchange and the NASDAQ. In 2007, the SEC approved use of IFRS for U.S. financial reports filed by foreign publicly-held companies that use IFRS in their home country. The SEC took a first step toward allowing all U.S. public companies to use IFRS in early 2008 when it proposed a draft roadmap and timeline with key milestones for adopting IFRS. The SEC met on February 24, 2010, voting to issue a statement of its position supporting IFRS and convergence of U.S. and international accounting standards, and directing the staff to execute a Work Plan to assist the Commission in evaluating implementation of IFRS by U.S. companies. On July 13, 2012, the SEC issued its Final Staff Report on the Work Plan which did not provide a recommended course of action. The final decision regarding whether to incorporate IFRS into the financial reporting system for U.S. issuers now rests with the SEC Commissioners. There is currently no estimated date for when such a decision will be made.

IFRS for Private Companies

The International Accounting Standards Board (IASB) released its International Financial Reporting Standard for Small and Medium Entities (IFRS for SMEs) geared toward non-public company enterprises that in the U.S. are generally referred to as private companies. IFRS for SMEs is a self-contained global accounting and financial reporting standard applicable to the general-purpose financial statements of and other financial reporting by these entities. It is a modification and simplification of full IFRS aimed at meeting the needs of private company financial reporting users and easing the financial reporting burden on private companies through a cost-benefit approach. The AICPA governing Council recognized the IASB in 2008 as an international accounting standard setter, giving AICPA member CPAs the option of using and auditing IFRS or IFRS for SMEs for private companies.

About IFRS

International Financial Reporting Standards are accounting standards developed by the International Accounting Standards Board that are becoming the global standard for the preparation of public company financial statements. The IASB is an independent accounting standard-setting body that is the international equivalent of FASB, which sets U.S. generally accepted accounting principles. Like the FASB, the IASB follows a rigorous, open due process to develop standards and cooperates with national accounting standard setters around the world.

The IASB consists of 15 members from nine countries, including the United States. It is funded by contributions from major accounting firms, private financial institutions and industrial companies, central and development banks, national funding regimes, and other international and professional organizations throughout the world. The IASB is governed by the IFRS Foundation.

Resources

The AICPA publishes the Web site www.ifrs.com, the premier source for IFRS news and resources in the United States. The AICPA has developed a variety of courses, publications, articles and case studies to help Americans learn about IFRS and understand the changes, challenges and opportunities that a U.S. transition to IFRS will bring.

For more information about IFRS, visit www.ifrs.com. Among other items, a list of frequently asked questions explaining IFRS and its applicability in the United States is available.

AICPA News Releases 

July 13, 2012 AICPA Applauds SEC's Effort to Review IFRS; Urges SEC to Act 

October 18, 2011 Most U.S. CPAs Support Giving U.S. Public Companies Option to Adopt IFRS, Survey Finds

August 17, 2011 AICPA Recommends SEC Allow Optional Adoption of IFRS by U.S. Public Companies

Outside Resources

SEC 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, July 13, 2012

IFRS Foundation staff analysis of the SEC Final Staff Report, October 22, 2012

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Audits of FHA-Approved Participants and Related HUD Requirements

Article:  FHA proposes new rule to strengthen risk management and shift accountability for the underwriting of FHA-insured loans to the mortgage banks. It may no longer require FHA to approve loan correspondents (mortgage brokers) participating in the FHA program and HUD would no longer require FHA to submit audited financial statements or audits
Published on May 14, 2013

Municipal Advisors

Article:  The AICPA generally supports the SEC’s proposed rules as a means to strengthen investor protections in the municipal securities market.  The AICPA is concerned, however, because the proposed rule would require that accountants performing customary and usual accounting services would be required to register as municipal advisors.
Published on May 01, 2013

Congressional and Political Affairs Advocacy

Overview:  The AICPA monitors and advocates on legislative and other matters that affect the accounting profession. Working with state CPA societies and other professional organizations, the AICPA provides information to and educates federal, state and local policymakers regarding key issues.
Published on May 01, 2013

Tax Legislation and Policy

Article:  The Congressional and Political Affairs Team often assists the Tax Team with tax legislation and policy issues, and advocates about them to Members of Congress and other key policymakers on behalf of the profession.
Published on April 03, 2013

Section 404(b) of Sarbanes-Oxley Act of 2002

Article:  The Sarbanes Oxley Act requires that the management of public companies assess the effectiveness of the internal control of issuers for financial reporting.  Section 404(b) requires a publicly-held company’s auditor to attest to, and report on, management’s assessment of its internal controls. AICPA believes that all investors in public companies
Published on April 03, 2013

GAO Study of Financial Planning

Federal Law:  Dodd-Frank required the GAO to conduct a study on the effectiveness of existing regulation of financial planners, including tax advisors.  The AICPA met with the GAO during the study to present the profession’s point of view.  AICPA strongly opposed any new regulatory structure affecting CPAs as they are already comprehensively
Published on April 03, 2013

Financial Literacy and Education

Article:  Learn about the AICPA's award winning financial literacy programs.
Published on April 03, 2013

FASB Independence and Fair Value Accounting

Article:  The AICPA strongly and unequivocally supports independence of the U.S. and international accounting standard setting bodies, the Financial Accounting Standards Board (FASB) in Norwalk, Connecticut, and the International Accounting Standards Board (IASB) in London.
Published on April 03, 2013

Extraterritorial Private Rights of Action, also known as F-Cubed Litigation

Article:  The accounting profession believes private litigants may utilize U.S. securities laws within the territorial jurisdiction of the U.S. and that the United States Supreme Court decision in Morrison v. National Australia Bank, Ltd. is the correct reading of the Securities Exchange Act of 1934.
Published on April 03, 2013

ERISA Fiduciary Definition - Appraisers of Employee Stock Ownership Plans

Article:  The AICPA believes that CPAs who perform valuation services for employee stock ownership plans (ESOPs) should not be defined as fiduciaries under the Employee Retirement Income Security Act (ERISA). Rather, the AICPA believes that the U.S. Department of Labor (DOL) should implement rules that would require appraisers of ESOPs to
Published on April 03, 2013

Consumer Financial Protection Bureau

Article:  This article outlines the AICPA's involvement with the development of the Consumer Financial Protection Bureau (CFPB). The AICPA was successful in winning recognition by House and Senate lawmakers of the vital role CPAs play in advising Americans on their financial decisions, thus preventing CPAs from reporting to a new regulatory body.
Published on April 03, 2013

Federal Legislative and Regulatory Issues

Federal Law:  This page highlights the advocacy issues in which the Congressional & Political Affairs Team is advocating on behalf of the profession, and also those issues that the team has recently followed.
Published on March 29, 2013

Tax Legislation and Policy - Recent Issues

Overview:  See current tax issues and legistlation that the AICPA recently followed. The Congressional and Political Affairs Team often assists the Tax Team with tax legislation and policy issues, and advocates about them to Members of Congress and other key policymakers on behalf of the profession.
Published on March 28, 2013

Audits of Federal Funds (Single Audits)

Article:  Entities that receive federal funds including states, local governments, and not-for-profit organizations (NPOs), are subject to audit requirements commonly referred to as “single audits” under the Single Audit Act of 1984, as amended in 1996.  The Single Audit Act was enacted to standardize the requirements for auditing federal programs. 
Published on March 28, 2013

Interstate Taxation/Mobile Workforce Bill

Article:  The AICPA is supporting legislation that would reduce the tax burden and compliance requirements related to nonresident state income tax withholding laws.
Published on March 19, 2013

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