Opposition to IFRS among U.S. CFOs

While recent surveys have shown support for IFRS among financial executives, a recent Grant Thornton survey Forty percent of U.S. CFOs and senior comptrollers do not believe U.S. companies should be required to useIFRS.

Thirty-nine percent of the 846 senior financial executives surveyed said that U.S. companies should start using IFRS in three to five years, and only 7 percent believe that U.S. companies should be required to start using IFRS immediately.

When asked about their own companies’ actual IFRS usage, 90 percent of the senior executives surveyed reported that their companies do not prepare financial statements according to IFRS. Only 15 percent of the senior execs at public companies said they use IFRS and only 8 percent from private companies said they do.

Thirty-nine percent said they are familiar with the Financial Accounting Standards Board’s project on financial statement presentation. The majority of those that say they are familiar with the project say it is either “beneficial, but the benefits to the users of our financial statements would not justify the costs of implementing the proposed format” (49 percent) or that it “would not be beneficial to the users of our financial statements” (30 percent).

When asked if there should be different recognition and measurement principles for public entities and nonpublic entities, 51 percent of the senior financial executives said yes (including 39 percent from public companies and 56 percent from private companies), while 41 percent said no (including 54 percent from public companies and 37 percent from private companies).

Asked whether nonpublic entities should be allowed to use simpler recognition and measurement principles when preparing financial statements, 60 percent of the senior financial executives said yes (including 42 percent from public companies and 66 percent from private companies), and 34 percent said no (including 51 percent from public companies and 29 percent from private companies).

When asked if nonpublic entities in the U.S. should be allowed to use IFRS for SMEs, or small and midsized enterprises, when preparing financial statements, 52 percent said yes and 20 percent said no.

New IFRS Fair Value Standard will be released In November

International Accounting Standards Board chairman, Sir David Tweedie, said thath the IASB will release a new fair value accounting rule by November.

In an address to a meeting of European Finance Ministers, which have in the past been critical of the IASB’s response to the financial crisis, Tweedie has sought to ease concerns by announcing that he is on track to deliver a new fair value standard by the end of this year.

“I gave a commitment to deliver on this timetable. We will publish the new standard in November,” he said.

Fair value accounting came under fire from banks and governments in the European Union and the U.S. after the financial crisis.

Tweedie said he will not require loan books to be held at fair value which has now become a potential sticking point between the IASB and the FASB.

FASB's proposal will see all assets measured at fair value. The IASB's mixed measurement model would see banks' loan books valued on an amortized cost basis.

The two standard setters are trying to converge US and international accounting rules, in the hope that the US will eventually adopt the new rules. But the fair value standard has now emerged as a significant obstacle, highlighted by Tweedie who said he simply did have the time to co-ordinate efforts with FASB in the revision of fair value, in the wake of the financial crisis.

“As I said in June, given the urgency of the fundamental issues surrounding IAS 39, none of us can afford the potential protracted back-and-forth resulting from piecemeal changes in international and US standards that would undermine the comprehensive and desperately needed reform that is under way,” he said.

“In our discussions with the FASB aiming to reach a common global approach, we will emphasise our position in favour of a mixed measurement model over one that requires full fair value measurement on the balance sheet… I remain optimistic that we can overcome our current differences.”

Deloitte Survey: Financial Execs want SEC to Move on IFRS

Financial executives are showing support for decisive SEC action in approving on the proposed IFRS roadmap.

The Deloitte survey, with over 150 financial executives participating, was conducted in September 2009.

Highlights of the survey results include:

• 70% of respondents indicated approval for the SEC’s proposed roadmap
• 51% responded that the SEC should approve the proposed roadmap, but consider pushing back the mandatory deadline a year
• 19% responded that the SEC should approve its proposed roadmap “as is.”
• 45% of respondents selected “delay in the finalization of the SEC’s roadmap” in characterizing the reason why their companies’ IFRS assessment plans may have been delayed
• 9% of respondents identified “economic challenges or constraints” as the reason for delaying an IFRS assessment.
• 34% of survey participants indicated IFRS adoption would make the U.S. more competitive in the global marketplace
• 38% responded that IFRS adoption would not

Survey Results

Dell Settles with SEC

Dell Inc. said last week that it will improve its accounting and corporate governance rules as part of a settlement tied to an SEC investigation.

Dell will also pay $1.75 million in legal fees, according to a settlement filed with the Securities and Exchange Commission.

The SEC investigation into Dell's accounting was made public in 2006. Various shareholder groups have filed lawsuits against Dell for misrepresention of its financial results while insiders profited from selling their own shares at prices that were inflated by the overstated results.

Dell restated results for 2003 through 2007 after an internal audit found it overstated sales by $359 million and profit by $92 million during those years. The SEC continues its probe.

Under the settlement filed with the SEC, Dell agreed to make sure at least 60 percent of its board members are from outside the company. Dell also said it would train board members and give directors unrestricted access to Dell's employees.

Dell had already implemented some changes as the lawsuit moved through the courts. Under the settlement the changes must be extended and enforced for four years.

Among them:

• an accounting code of conduct
• enhanced ethics, compliance and insider-trading training
• creation of a global team of accountants to focus on revenue recognition issues
• provision to let employees make anonymous complaints about auditing or internal controls.