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IFRS: Misaligned SEC / AICPA Priorities . . . .

May 15th, 2009 Comments off

While I usually try and remain neutral and stay with the facts as it relates to accounting topics, I read a press release yesterday, which absolutely left me shaking me head with respect to the planned adoption of IFRS reporting in the U.S.  I have posted quite a few entries regarding this area and have my doubts that we are moving towards a successful implementation of these standards in the U.S. and this doubt was further reinforced after the AICPA press release from yesterday.

 

                Keep in mind that the schedule is still in flux as key business representatives are pushing for a delayed adoption of IFRS, but let’s assume that we are going forward with the SEC adoption date of mandated phased-in adoption starting in 2011. With this in mind, the accounting profession, who will be required to provide professional guidance, and my colleagues in the corporate sector, need to already be training on these standards and planning system reporting calendars for adoption.  It will not be as easy as “flipping the switch”. In fact, we ran IFRS reporting parallel to our GAAP reporting for two quarters before fully converting.  Back to the preparation though for IFRS – below is a sampling of statistics from yesterdays IFRS press release:

 

When asked to rate their level of familiarity with IFRS:

a.  36% responded they “want” Advanced or Expert knowledge

b.  24% responded there is a need for “some” knowledge.

c.  21% responded they require a “Basic” knowledge.

d.  There was no info reported on the missing 19%.

 

The AICPA further reported that “CPA’s are still evaluating their business & client needs”.   Really? What is there to evaluate on the “needs” front when the SEC is looking to have mandated phased-in reporting by 2011?

 

The AICPA further reported on the status of IFRS knowledge over the last 6-months:

                a.  22% responded they have no knowledge of IFRS (down from 30%).

                b.  43% have a “Basic” knowledge

                c.  24% have “Some” knowledge.

                d.  There was no info reported on the missing 11%.

 

I would also be interest to know what the difference is between “Basic” and “Some” knowledge.  I feel fortunate that I have been through a full IFRS implementation, but what if I were the CFO of a public company that wanted to start planning for an implementation and was looking to hire consultants, where 69% of the population has only “Basic” or “Some” knowledge?

 

                I took my review one step further and conducted a quick review of what the USC Leventhal School of Accounting is doing to prepare accounting students for what could be a massive shift in accounting standards and reporting.

 

                a.  For the MAcc degree, which has an offering of 21 classes to choose from, only one class was international in nature; Accounting in a Global Environment.

                b.  In further review of the entire Accounting course catalog, which consists of 84 classes, there are only two classes that are international in nature; the one listed above, as well as Taxation of Foreign Business Operations.

                c.  There is not one class that is titled as IFRS specific.

                d.  There is not one class that mentions IFRS in the course description.

 

                I would absolutely welcome feedback, but if we are truly moving towards an implementation of IFRS reporting in the U.S. does it really appear that we are preparing ourselves for this shift?  Does it appear from the stats above that we are being set-up for a massive talent squeeze of IFRS experts who can provide the appropriate guidance? I have had my doubts with the SEC calendar and the likelihood for an IFRS adoption for some time, but now that doubt seems to be further supported.

 

This is one area I’d love to hear back from peers on.

 

Thanks for reading….

 

Jeffrey Ishmael

IFRS – potential rollout after 12/15/09

August 27th, 2008 Comments off

As expected, the SEC announced a preliminary overview of the roadmap that would be put into place for the transition of financial reporting to IFRS. Overall, the Commission expects that there will be a full transition by 2014, but that there will be further details released with respect to the milestones needed achieve the goal.

Specifics of the information released this morning outlined the ability of certain companies to be able to begin reporting under IFRS after December 15, 2009. Companies that are considered to be in the Top-20 for their industry will be allowed to begin reporting after this date. There are approximately 110 companies in 34 industries that would be able to begin reporting after this date. This is probably a bit quicker than some might have anticipated, since this is only 16-months out.

Although the milestones have yet to be released, the Commission has tentatively scheduled a review of these milestones in 2011 to gauge the progress and determine if they will open up the ability to report under IFRS to a larger population of companies. There are also proposals for companies to provide reconciliations between prior GAAP reporting and the revised reporting under IFRS. The proposal calls for a 3-year reconciliation. This should be more than just a proposal at this point but an absolute requirement for investors to see the “walk” between the two reporting structures.

Even for a later date of 2011, this is not a very large window for governing bodies and schools to organize appropriate curriculum to cover the topic. The Commission requested that the AICPA and States add questions to existing exams for IFRS. Rather than add questions to the exam it would seem that there should be the introduction of a new module (?) that would cover IFRS. I still have a hard time believing that we are potentially looking at a 100% conversion to IFRS with no carry forward of GAAP. Not with the energies that have been expended over the last decade on new regulations, and prosecution of those regulations.

Time will tell. Thanks for reading . . . .