Thursday, April 21, 2011

Giving a Rodent's Posterior about IFRS

I love the way that the author introduces this article:

Anyone Who Gives a Rat’s Behind About IFRS Needs to Mark July 7 on Their Calendars

Cause there’s gonna be a roundtable.

The Securities and Exchange Commission staff announced today that it will sponsor a roundtable in July to discuss benefits or challenges in potentially incorporating International Financial Reporting Standards (IFRS) into the financial reporting system for U.S. issuers.

The July 7 event will feature three panels representing investors, smaller public companies, and regulators. The panel discussions will focus on topics such as investor understanding of IFRS and the impact on smaller public companies and on the regulatory environment of incorporating IFRS.

“We must carefully consider and deliberate whether incorporating IFRS into our financial reporting system is in the best interest of U.S. investors and markets,” said SEC Chief Accountant James Kroeker. “This roundtable will provide an excellent opportunity for investors, preparers, and regulators to provide the SEC staff with valuable information that will help the Commission in its ongoing consideration of incorporating IFRS.”

See you there. If you manage to recover from your July 4th meat sweats, that is.

Monday, April 18, 2011

XBRL and IFRS Mess

As a result of a series of missteps and lack of coordination, companies that file financial statements in the United States following IFRS may be getting a break on their first XBRL filing.

The SEC have acknowledged that it would be impossible for foreign private issuers, filing with the SEC following IFRS, to file in XBRL, because the SEC has yet to approve the XBRL taxonomy that IFRS filers should follow. Foreign private issuers (“FPI”) filing quarterly “voluntary” 10-Q filings are the first group of the third and final wave of companies coming under SEC rules to file in the XBRL for the first time.

For example a calendar year FPI in this group files its 30 June 2011 Form 10-Q on its Monday 10 August 2011 due date. The company would have until Tuesday 8 September 2011 to file its first XBRL exhibit under Form 10-Q/A. No grace period would be available for its 30 September 2011 Form 10-Q.
For a FPI not filing voluntarily on domestic forms, its annual report on Form 20-F or Form 40-F for its year ended on or after 15 June 2011 will be the first SEC report required to include XBRL data. So a calendar year filer in this group would file its annual financial statements in XBRL format by its filing deadline in 2012.

To provide financial statements in XBRL according to SEC's rules, companies must follow a taxonomy approved by the SEC. A taxonomy is a list of computer-readable tags in XBRL that allows companies to tag the thousands of bits of financial data that are included in financial statements and footnote disclosures. On March 25, the IFRS Foundation finalized a 2011 IFRS taxonomy that would be followed by IFRS issuers to file in XBRL. The SEC has not yet approved that taxonomy, and hasn't said when it expects to do so. An SEC spokesman said the IFRS Foundation is still working on the taxonomy. Previously taxonomies took about five weeks for SEC approval.

The SEC has relaxed its rules for filings stating: “We are of the view that foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB are not required to submit to the Commission and post on their corporate websites, if any, Interactive Data Files until the Commission specifies on its website a taxonomy for use by such foreign private issuers in preparing their Interactive Data Files,” Cross and Kroeker wrote. The letter gives no indication, however, of when the SEC expects to approve the IFRS taxonomy and therefore how that might impact the date for XBRL filing requirements.

Friday, April 15, 2011

IFRS Convergence Projects Delayed

The heads of FASB and IASB announced they will take “a few additional months” beyond their June target date to complete priority joint convergence projects on revenue recognition, leases, financial instruments and insurance. This is a reasonable development, and expected by most observers. The original convergence deadlines were optimistic and some thought that inferior standards would result if the projects were rushed. A few quotes below.

David Tweedie, Chairman of the IASB
Leslie Seidman, Chairman of the FASB

David Tweedie: “...if you were listed in the United States using IFRSs you had to reconcile to US GAAP, that showed where the differences were, and what we did was try to look through our standards and if FASB had a better standard, we should take it and vice versa. That was going to take forever so in 2006, the Memorandum of Understanding (MoU) was instituted and that set out a different policy, namely that we should look at certain standards, and for each of these standards, if it was complex or out of date there was no point in trying to converge them otherwise we would just get a complex out-of-date converged standard when what we should really do is write a better one.” “...we have completed most of that program and it’s been a great success, the two sets of standards are much closer together and frankly IFRSs are much better quality than they would have been otherwise.”

Seidman: “We would never let a target date take priority over thorough and robust due let me clarify any misunderstanding about the June 2011 date. It was always intended to be a target, not a deadline, and we always said that achieving the target was subject to the nature and extent of the feedback that we got on each of the exposure documents. At this point on each of the exposure documents we have received significant and very constructive feedback and we are in the process of working through those issues. The quality of the standards remains of the utmost importance. Every board member wants to issue high quality standards that we think are going to withstand the test of time.”

Tweedie: “We have been working on these now for some five years so this is hardly a rush job and what we have done, and I think this is a big change in standard-setting over the past couple of years, is we have gone out deliberately to get high quality in put in addition to that required by our due process. This extensive outreach is something that hadn’t been done to the extent that it is now. We get constant input, and we test these ideas as we finalize the standards.”

Tweedie: “...we would never release a standard before it is ready and ultimately it must be a high quality standard or you just can’t issue it.”

Seidman: “After evaluating the issues yet to be addressed we jointly concluded that, without extending the work out indefinitely, we all could benefit from a few more months to develop these standards, some of which really go to the core issues of many companies.”

Tweedie: “So as Leslie was saying there, we have decided to extend the timetable for a few additional months to enable us to check whether our conclusions will last the test of time. We are also mindful of the G20 target, we have been reminded of that many times over the last few years, and we intend to try to finish this convergence program by end of 2011. The June target has helped us to get there but at the same time it is clear that we need a little more time to check the conclusions, and to ensure that the standards are of the highest quality.”

Seidman: “Let me mention one other thing, we have yet to decide on the effective dates for these standards but we do want to reassure people that we will allow ample time for them to understand the requirements and to plan for an effective transition to the new standards once those decisions are made.”