IFRS Convergence Challenges: SEC
The SEC (the Securities and Exchange Commission) has just published its first progress report on the plan it has been developing on the introduction of global accounting standards.
The SEC is the US watchdog for its financial markets.
An US survey has suggested that most of the Chief Executives of companies are adopting a “wait and see” approach for implementing the IFRS (International Financial Reporting Standards).
The SEC is planning to identify 6 key areas that should be addressed. They are namely, development and application of IFRS for the US domestic reporting system; investor understanding and education regarding IFRS; the impact on public companies both large and small; the independence of standard setting for the benefit of investors; the impact on the US regulatory environment; and human capital readiness.
The SEC has said that after the completion of the work plan of the IASB (International Accounting Standards Board) and the FASB (Financial Accounting Standards Board) regarding their convergence projects, in 2011 the SEC will be able to determine whether or not it will incorporate IFRS into the US financial reporting system.
A survey done by KPMG, the consultancy firm, has found that 75% of the respondents polled out of the over 900 accounting and financial reporting executives said that, the organizations they work for would not move away from the GAAP before the SEC mandates that IFRS is the standard for the filing of financial reports.
Nearly 50% of the respondents to the poll said that they expect the SEC mandate on IFRS in 2011 while only 15% said that they didn’t expect a decision next year.
One-third of those polled said that they understand the IFRS well. Only 20% of the respondents in a similar poll conducted last year had said so.