Because “incorporation” through standard-setting is geared
toward eliminating the differences between IFRS and U.S.
GAAP, it could facilitate full recognition of IFRS’s benefits,
while simultaneously addressing some of the concerns that
have been raised regarding the implementation of IFRS.
Beyond alleviating certain of the challenges associated with
outright IFRS “adoption,” incorporation addresses issues such
as FASB’s future and the U.S. maintaining control over the
It is also possible that the Commission could permit voluntary
adoption of IFRS by certain companies, such as large multinationals, before the incorporation process is complete,
allowing them to benefit from IFRS sooner.
As the boards continue to work through their agendas,
what’s important is the stability and transparency of the
global standard-setting process, and how national standard-setters like the FASB may play a role in that process once IFRS
is incorporated as a reporting requirement.
What’s Next and How to Plan for It
Like children on an extended car trip, many in the U.S. are
asking, “when will we get there,” as it relates to IFRS. This
year should bring some level of clarity as FASB and the IASB
complete their convergence agenda and the SEC determines
the next steps on IFRS.
While the SEC has not outlined a definitive timeframe for
when IFRS might be incorporated into the U.S. financial
reporting framework, it has indicated that it could be by
2015 or 2016. That may seem like a long way out, but
because of the need to present comparative information and
the large volume of changes coming to both U.S. GAAP and
IFRS, most companies are already considering how to deal
with the movement to IFRS and other U.S. GAAP changes
resulting from convergence efforts.
Whether it’s a new “converged” U.S. GAAP standard or
IFRS, it’s important to keep in mind that the impacts are not
just about accounting. Considerations should include not
only the readily apparent implications such as those related
to accounting, internal control, staffing and expertise, and
statutory and internal reporting, but also less apparent
implications in areas such as technology, tax, contracts, debt
covenants, and internal and external communications. Given
the broad implications, personnel both inside and outside of
finance and accounting will need education and training.
The board and audit committee should understand how
management will address both the new requirements and