Are we getting closer to global accounting standards? After a short hiatus, the Securities and Exchange Commission (SEC) has announced the steps it intends to take in making the determination of whether to transition U.S. capital markets to IFRS. BackgroundThe SEC voted last week to issue a statement that lays out its position on global accounting standards and makes clear that the SEC continues to believe that a single set of high-quality globally accepted accounting standards would benefit U.S investors. While continuing to support the ongoing convergence of U.S. Generally Accepted Accounting Principles (U.S. GAAP) and International Financial Reporting Standards (IFRS), the SEC directed its staff to execute a Work Plan aimed at evaluating the impact that the use of IFRS by U.S. companies would have on the U.S. securities markets. As part of the Work Plan, the SEC will consider IFRS, as it exists today and after the completion of various "convergence projects" currently underway between U.S. and international accounting standards-setters. Predicated on the completion of the convergence projects and its Work Plan, by 2011 the SEC will decide on whether to incorporate IFRS into the U.S. financial reporting system, and if so, the timing and manner in which that would be carried out. In addition, the SEC believes it is important to carefully consider and deliberate whether such a change is in the best interest of U.S. investors and markets. These new developments follow the Proposed Roadmap published by the SEC in November 2008, in which the SEC laid out a series of milestones to consider in determining whether to transition U.S. capital markets to IFRS. Commenters to the Proposed Roadmap were very supportive of the goal of having a single set of high-quality globally accepted accounting standards, but had different views as to the approach in the Proposed Roadmap. Based on feedback received from commenters on the Proposed Roadmap, the SEC has tentatively decided that if it determines in 2011 to incorporate IFRS into the U.S. financial reporting system, the first time that U.S. companies would report under such a system would be no earlier than 2015. This timeline will be further subject to the Work Plan. The SEC staff has stated that it will provide public progress reports on the Work Plan, as well as the status of the FASB and IASB convergence projects, beginning no later than October 2010 and frequently thereafter until the work is complete. Click here to access the full text of the SEC Statement in Support of Convergence and Global Accounting Standards. Duff & Phelps ServicesDuff & Phelps is world renowned for its in-depth expertise in performing purchase price allocations prepared in accordance with the relevant accounting standards, using appropriate and defensible valuation approached and methodologies. Our unparalleled knowledge of IFRS 3, IAS 36 and 38, U.S. Accounting Standards Codification (ASC) topics 805 and 350, and related U.S. GAAP guidance, combined with our experience consulting with corporations globally across a wide range of industries, uniquely qualifies us to assist our clients in meeting the financial reporting requirements for business combinations and subsequent impairment testing.To learn more about the potential valuation changes upon an eventual IFRS adoption, please listen to a replay of a Duff & Phelps December 3, 2009 webcast on IFRS and Valuation - A Look at the Changes Ahead Upon IFRS Adoption. | |