Monday, April 13, 2009

AICPA Wants Changes to Roadmap Before Supporting IFRS

The American Institute of Certified Public Accountants (AICPA) has asked for additional changes to financial reporting rules before follwing the SEC Roadmap to adoption of IFRS.

The AICPA said it supports IFRS for public companies but before adoption of it wants the SEC to implement the recommendations of the SEC’s Advisory Committee on Improvements to Financial Reporting relating to the use of professional judgment.

The AICPA notes that only after a final adoption date is set for IFRS will the U.S. financial reporting system make significant changes and move toward adoption. They note that the requirement of the SEC for three years of comparative information is a barrier to adoption. More specifically, if the final adoption date is 2014, U.S. issuers must begin to adopt IFRS in 2011, in order to have comparative figures available.
They argue that companies would need up to two years to make necessary upgrades, suggesting that the transition will take five years—two years of upgrades plus three years to compile comparative figures.

The AICPA suggests that implementation could be shorter SEC allows U.S. issuers to follow IFRS 1, First-time Adoption of International Financial Reporting Standards, and provide only two years of information in the year of adoption, i.e. the current year plus one year of comparatives.

The AICPA feels that the SEC Roadmap requires dual recordkeeping—in the years prior to adoption, companies need to keep two years of recorded in both U.S. GAAP and IFRS.

The AICPA supports limited early adoption of IFRS, but argues that more companies, including smaller issuers, should be allowed to early-adopt.

The AICPA also recommends that the SEC set aside a portion of its current public company levies to fund standard-setting activities of the International Accounting Standards Board.

The AICPA’s Board of Examiners has issued new IFRS material for the CPA exam that include IFRS that will be on the Uniform CPA Examination on or before 2012.

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