After months of anticipation, in July the SEC staff issued its final staff report on its IFRS “Work Plan.” The report was not intended to be the final say on IFRS in the United States, but those looking for clarity on the path forward were disappointed. The report did not include a recommendation on whether, when, or how IFRS should be incorporated into the U.S. financial reporting system, nor did it provide an action plan on next steps toward a decision on IFRS or discuss a voluntary-adoption option. Notably, the SEC staff found little support in the United States for an outright adoption of IFRS. However, the SEC staff did find substantial support for exploring other methods of incorporating IFRS.
Although the final report on the Work Plan did not provide details as to next steps, it does represent an important milestone and the culmination of more than two years of effort by the SEC staff to complete a comprehensive study of IFRS. The IFRS Foundation Staff recently issued a response to the Work Plan, summarized in the In brief 2012-47 below.
Discussions in the U.S. have recently focused on one method of incorporating IFRS − through an active FASB potentially endorsing new and existing international accounting standards. This would merge IFRS into U.S. GAAP over a period of years, making the two sets of standards more similar, if not substantially the same.
The United States may not be adopting IFRS in the near future, but don’t lose sight of the significant accounting changes closing in for U.S. companies. The FASB and IASB continue to work toward finalizing accounting standards on revenue, leasing, and financial instruments. These standards will affect virtually all companies, whether they report under U.S. GAAP or IFRS.
The FASB and IASB also continue to work toward finalizing accounting standards on revenue, leasing, and financial instruments. These standards will affect virtually all companies, whether they report under U.S. GAAP or IFRS.
The SEC staff’s report suggests there’s more work to do before the SEC makes a final decision about IFRS. What’s not clear is exactly what is left to do and when. Given everything else on the SEC’s plate, the Presidential elections, anticipated leadership changes at the regulator and standard-setter, and the current lack of political or business mandates for a near-term move to IFRS, we expect the timing of any additional activity to extend beyond 2012. For more details of the findings in the report, see Dataline 2012-06.
PwC's publication will help you develop a broad understanding of the major differences between IFRS and US GAAP. It also contains insight on recent and proposed guidance, including developments pertaining to the overall convergence agenda. Read more