The American Institute of Certified Public Accountants has recommended to the Securities and Exchange Commission that U.S. public companies be allowed the option of adopting use of International Financial Reporting Standards as the commission weighs a possible future framework for incorporating IFRS into the U.S. financial reporting system.
The SEC is now considering public comments on its proposed method for incorporating IFRS in the U.S. financial reporting system and is expected to issue a decision by year end about the direction it intends to take.
The AICPA supports the goal of a single set of high quality, globally-accepted, comprehensive financial reporting standards because that will benefit investors, issuers and capital markets.
The AICPA believes the standards issued by the International Accounting Standards Board are best positioned to become those global standards. To support that long term goal, the AICPA believes the SEC should allow large multinational corporations that are competing in a global marketplace the option to use IFRS now if they choose.
“An adoption option would provide a level of consistency in the treatment of U.S. companies and foreign private issuers that report under IFRS that does not exist today, and would facilitate the comparison of U.S. companies that elect IFRS with their non-U.S. competitors that use IFRS,” Paul V. Stahlin, AICPA chairman, and Barry C. Melancon, AICPA president and CEO, said in an August 17 letter to the SEC.
“Furthermore, giving U.S. companies an option to adopt IFRS as issued by the IASB would be another important step towards achieving the goal of incorporating IFRS into the U.S. financial reporting system. 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,” Stahlin and Melancon said.
The SEC should design its endorsement process to reach the objective of a single-set of high-quality, globally accepted accounting standards as quickly and efficiently as possible. The AICPA believes there should be a strong role for U.S. standards setters at the IASB, but the Financial Accounting Standards Board should only rarely authorize differences from standards issued by the IASB and only with SEC oversight in accordance with a pre-established protocol. To avoid transition fatigue, IFRS standards not subject to current or future convergence review should be adopted with a date certain.
Comment letters on the Commission Statement in Support of Convergence and Global Accounting Standards are available on the SEC’s website.