IFRS in the US
Although a mandatory (or voluntary) change to IFRS for U.S. public companies is no longer in the foreseeable future, IFRS is increasingly relevant to many U.S. companies, big and small, public and non-public, because of: (i) cross-border, M&A activity; (ii) the reporting needs of non-U.S. stakeholders; (iii) the IFRS reporting requirements of non-U.S. subsidiaries; and (iv) the U.S. GAAP changes resulting from the boards’ coordinated efforts. Being accounting “bilingual” in the U.S. is increasingly important.
- Many of the world’s capital markets now require IFRS, or some form thereof, for financial statements of public-interest entities. The remaining major capital markets without an IFRS mandate are (i) the U.S., with no current plans to change; (ii) Japan, where voluntary adoption is allowed, but no mandatory transition date has been established; (iii) India, where regulatory authorities have made public statements about the intention to adopt, but no formal plans are in place; and (iv) China, which intends to fully converge at some undefined future date.
- In July 2012, the SEC’s Office of the Chief Accountant issued its final report on its IFRS work plan intended to aid the SEC in evaluating the implications of incorporating IFRS into the U.S. reporting system. The report did not include a recommendation from the staff on whether, when, or how IFRS may be incorporated into the U.S. financial reporting system. The report also did not include any next steps toward a SEC decision on IFRS.
- The lack of clear direction regarding IFRS is attributable to many factors, including the current status of the FASB and IASB’s convergence projects, and a focus by the SEC on other required rulemaking (e.g., Dodd-Frank). While the staff found little support for adopting IFRS as authoritative guidance in the U.S., it did find substantial support for exploring other methods of incorporating IFRS that demonstrate a U.S. commitment to the objective of a single set of high-quality, global accounting standards.
- A sign of the willingness to keep the U.S. involved in global standard setting was the inclusion of the SEC on the Monitoring Board, which is a global group of regulators that oversees the IFRS Foundation.
- Another sign is the FASB’s participation in the IASB’s Accounting Standards Advisory Forum (ASAF), a group created by the IFRS Foundation that provides technical advice to the IASB. The ASAF has twelve members of the global accounting standard-setting community.
- In the meantime, the FASB and the IASB continue to work together on aspects of four remaining convergence projects: revenue recognition, financial instruments, leasing, and insurance. Once these projects are complete, we believe that the "era" of convergence will be at an end.
- Although there is much uncertainly around the eventual use of IFRS in the U.S. for public companies, there are certain actions companies should consider doing now:
– Stay engaged in the standard-setting process by participating in FASB and IASB roundtables and comment-letter processes;
– Develop an understanding of the potential impact of foreseeable U.S. GAAP changes, and identify what can be done now;
– Maintain some degree of corporate oversight of non-U.S. subsidiaries' IFRS accounting, as complex transactions arise, policies require changing, and new IFRS standards are adopted; and
– Develop or obtain detailed IFRS skills, depending on the level of M&A activity, global tax strategies, or the reporting needs of non-U.S. stakeholders.
- U.S. financial reporting will significantly change in the next several years, due to the completion of new accounting standards resulting from the convergence projects.
- The impact of the accounting change caused by convergence will also reach beyond financial reporting. Some of the areas that will be affected include M&A processes and due diligence, contract terms, tax planning, financial planning, systems requirements, communication with stakeholders, credit agreements, and compensation structures.
IFRS and US GAAP: similarities and differences - 2013 edition
10/22/13 | US GAAP and IFRS Convergence
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
IFRS newsIFRS news - September 2014
9/9/14 | Assurance services
This issue of IFRS news looks at (1) alternative performance measures, (2) discussion of IFRIC agenda rejections also known as "Not-an-IFRIC," (3) IASB spotlight on IASB member Amaro Gomes, (4) IAS 27 narrow scope amendment, (5) exposure draft on IAS 12 narrow scope amendment, (6) IASB workplan, and (7) Q&As: service concession arrangements.
IFRS newsIFRS news - July/August 2014
8/11/14 | Assurance services
This issue of IFRS news looks at (1) IFRS 9 - the IASB's new standard on financial instruments, (2) Revenue Transition Resource Group (TRG) starts discussion on IFRS 15, (3) ESMA reports on accounting for business combinations under IFRS 3, (4) IAS 41 and IAS 16 amendments on bearer plants, (5) EU endorses IFRIC 21, (6) leasing redeliberations, (7) disclosure initiative, (8) conceptual framework discussions, and (9) Q&As: related parties.
WebcastHealthcare Higher Education and Not-For-Profit Series - Hot Topics and Technical Updates Impacting Accounting and Financial Reporting - July 24, 2014
This webcast will cover FASB standard setting developments that have occurred since the April webcast. Among other matters, developments related to the FASB/IASB convergence projects will be addressed, with a concentration on the new revenue recognition standard issued in May, as well as an update on FASB projects impacting not-for-profit entities, including the not-for-profit financial statement project. As always, the emphasis is on not-for-profit organizations that apply FASB standards, with an emphasis on healthcare and higher education institutions.
IFRS newsIFRS news - June 2014
6/5/14 | Assurance services
This issue of IFRS news looks at (1) the IASB and FASB's new revenue standard, (2) IFRS 11, Joint arrangements, (3) IAS 16 and IAS 38 amendments, (4) leasing redeliberations, (5) conceptual framework discussions, (6) IASB equity accounting research project, (7) uncertain tax positions, and (8) Q&As: qualitative disclosures about risk.
In briefIn brief: Revenue recognition - The future is here
5/28/14 | Assurance services
The FASB and IASB have issued their long-awaited converged revenue standard. Some change is expected for most entities.
IFRS newsIFRS news - May 2014
5/8/14 | Assurance services
This issue of IFRS news looks at (1) IASB’s discussion paper on accounting for macro hedging, (2) integrated reporting, (3) IFRS in the US, (4) foreign exchange - a moving target, (5) revenue standard expected in second half of May, (6) IASB’s research programme, (7) leasing deliberations, and (8) Q&As: perpetual debt.
WebcastHot topics and technical updates impacting accounting and financial reporting for Healthcare, Higher Education and Not-for-Profit webcast – April 24, 2014
This installment of PwC's Healthcare, Higher Education, and Not-for-Profit quarterly webcast series covers (1) recent developments related to the FASB/IASB convergence projects, (2) an update on FASB projects impacting not-for-profit entities, and (3) as a refresher we will talk about standards that will be effective this year.
IFRS newsIFRS news - April 2014
4/7/14 | Assurance services
This issue of IFRS news looks at (1) leases – convergence is no longer a priority, (2) IFRS 10 practice issues, (3) OCI - feedback from the Conceptual Framework Discussion Paper, (4) EU backs IFRS Foundation, (5) exposure draft on IAS 1 narrow scope amendments, (6) joint arrangement implementation issues, (7) equity method in separate financial statements, and (8) Q&As: Onerous contracts.
IFRS newsIFRS news - March 2014
3/10/14 | Assurance services
This issue of IFRS news looks at (1) Change on the horizon - Peter Hogarth looks at recent developments, (2) Olivier Schérer gives his perspective on the post implementation review, (3) Debt versus equity - regulatory reform adds fuel to the age old debate, (4) Convergence out of sight as IASB and FASB diverge, (5) IFRS 9 effective date, (6) New revenue standard delayed, (7) IFRS Workplan, (8) IC stops debate on ‘higher of’ plans (9) Q&As: ‘N’ is for Non-controlling interests.
- IFRS in the US: The importance of being financially bilingual
3/5/14 | US GAAP & IFRS Convergence
US public companies will not be required to adopt IFRS in the foreseeable future, but it’s increasingly important for a US capital market participant to be financially bilingual.
Corporate Governance SeriesShareholder questions: Management's considerations for 2014 annual meetings
3/3/14 | Assurance services
This PwC publication is intended to help management and the board of directors of public companies prepare for the annual meeting of shareholders. It contains example questions on topics that may be top-of-mind for shareholders, along with background information and suggested actions for management’s consideration.
- Power and Utilities Alert 2014-4: Accounting for rate-regulated activities under IFRS
2/10/14 | Power & utilities
The International Accounting Standards Board (IASB) issued International Financial Reporting Standard 14, Regulatory Deferral Accounts (IFRS 14), an interim standard on the accounting for certain balances that arise from rate-regulated activities.
PwC comment letter (IASB)PwC comments on IFRS Interpretations Committee's tentative agenda decision: IFRS 2–Share-based Payment
2/6/14 | Global accounting consulting services
In this comment letter, we respond to the boards tentative agenda decision: IFRS 2, Share-based payment – price difference between the institutional offer price and the retail offer price for shares in an initial public offering. We support the committee’s decision not to take this question onto the agenda but not for the reasons given. We are concerned that the reasons given for the agenda decision will increase diversity in practice regarding the application of IFRS 2 paragraph 13A and may also lead to diversity in the application of IFRS 13.
PwC comment letter (IASB)PwC comments on the IASB's proposed amendments to IAS 27 to allow equity method accounting
2/6/14 | Global accounting consulting services
In this comment letter, we do not object to the board’s proposal to restore the use of the equity method as one of the options to account for investments in subsidiaries, joint ventures and associates in an entity’s separate financial statements. However, we do not support the requirement for retrospective application of the exposure draft nor the proposed consequential amendment to IAS 28, Investments in Associates and Joint Ventures.
IFRS newsIFRS news - February 2014
2/6/14 | Assurance services
This issue of IFRS news looks at (1) needs of capital providers: EFRAG and ICAS report, (2) IFRIC 21 - just ‘levies’ or much more?, (3) how should business models affect accounting?, (4) interim standard on regulatory deferral accounts , (5) IFRS 9 redeliberations, (6) IFRS 3 post implementation review, (7) lease redeliberations, (8) IAS 1 narrow scope amendments, and (9) Q&As: money market funds.
IFRS newsIFRS news - December 2013/January 2014
1/2/14 | Assurance services
PwC's monthly report shedding light on the IASB's activities. This edition looks at (1) IFRS 9 hedging project, (2) revised pension changes, (3) 10 Key reminders for 2013 year-ends (4) IAS 27 narrow scope amendments, (5) ESMA enforcement decisions, (6) IIRC integrated reporting Framework, (7) IFRS 9 deliberations, (8) annual improvements, and (9) know your IFRS 'ABC': 'L' is for Loans.
Accounting guidesUS GAAP: Issues and solutions for pharmaceuticals and life sciences industry
11/20/13 | Pharmaceuticals & life science
This publication highlights factors the industry should consider and provides guidance on the most pertinent accounting solutions under US GAAP. The solutions presented are meant to provide a framework for determining the appropriate accounting answer for general solutions.
In briefIn brief: Revenue recognition – Boards wrap up redeliberations (No. 2013-45)
11/1/13 | Assurance services
The boards address outstanding issues related to the revenue recognition project, including the constraint on variable consideration, collectibility and licenses.
- IFRS and US GAAP: similarities and differences - 2013 edition
10/22/13 | US GAAP & IFRS Convergence
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.
- Power and Utilities Alert 2013-7: Accounting for rate-regulated activities under IFRS
8/27/13 | Power & utilities
The IASB’s Consultative Group met in July to discuss responses to the Request for Information (RFI) on the rate regulation project.
- Power and Utilities Alert 2013-6: Accounting for rate-regulated activities under IFRS
4/30/13 | Power & utilities
The IASB issued a Request for Information related to its project on rate-regulated activities, as well an interim standard exposure draft.
- PwC video perspectives on IFRS
12/17/12 | US GAAP & IFRS Convergence
In these videos, PwC partners discuss several key issues related to the adoption of IFRS in the US.
VideoIFRS: M&A perspectives
9/17/12 | Assurance services
IFRS: M&A perspectives
VideoIFRS: The SEC's report and looking ahead
9/17/12 | Assurance services
IFRS: The SEC's report and looking ahead
DatalineDataline: SEC Staff releases its final report on its IFRS Work Plan (No. 2012-06)
8/8/12 | Assurance services
The SEC Staff recently published its final Staff Report regarding the potential impact of incorporation of IFRS into the US financial reporting system. This Dataline looks at the six key areas covered in the Staff Report and offers our observations.
DatalineDataline: SEC Staff continue progress on IFRS work plan -- Comparison between IFRS and US GAAP frameworks and analysis of IFRS in practice (No. 2011-36)
12/6/11 | Assurance services
On November 16, 2011, the SEC's Office of the Chief Accountant (the SEC Staff) published two staff papers. The first summarizes differences between the US GAAP and IFRS frameworks, and the second analyzes how IFRS is applied in practice. The papers were published pursuant to the SEC StaffÆs work plan to analyze considerations relevant to the Commission's decision on whether, when, and how IFRS might be incorporated into the US financial reporting system. This Dataline provides a summary of selected differences between US GAAP and IFRS noted in the first paper. It also summarizes the Staff's key observations included in the second paper on how IFRS is applied in practice. ...
Tax accounting insightsIFRS, the current landscape for US tax executives
1/9/11 | Tax accounting services
The potential transition to IFRS in the United States has been an ongoing focus of the SEC over the past several years. As part of their current workplan, the SEC is analyzing the impact of IFRS on US issuers and whether, when, and how to incorporate IFRS into the US financial reporting system. In this Tax accounting insights, we inform US tax executives on the current landscape of IFRS, including the key tax considerations that may arise in the near-term
Tax accounting insightsStock option awards under IFRS: Tax accounting impacts earnings
7/7/08 | Tax accounting services
PwC analysis of the potential impact of IFRS on shared-payment stock plans. An IFRS conversion may affect cash taxes and affect financial reporting systems and processes.