Despite the fact that a rising number of foreign companies are using International Financial Reporting Standards (IFRS) to file their financial reports with the Securities and Exchange Commission (SEC), the SEC still has reservations about incorporating the international accounting compliance
guidelines into the U.S. financial system, according to Accounting Today.
During a recent panel discussion at Financial Executives International's 31st Annual Current Financial Reporting Issues conference in New York, Paul Beswick, the acting chief accountant in the SEC's Office of the Chief Accountant, went over the findings of the SEC's staff reports on IFRS. Beswick noted that a formal decision about whether to proceed with incorporating IFRS accounting legislation
has not yet been made.
"I think a number of people were surprised that the final staff report didn't have a recommendation to the commission," Beswick said
, as quoted by the news source. "I think it's important to understand that wasn't really the intent of the work plan. The intent of the work plan really was to be more information gathering, to help inform the commission's thought process."
The SEC staff looked at a number of elements related to IFRS, including the burden of conversion, the development of the standards themselves over the past 10 years, measures that other regions have taken in order to try to increase global application and enforcement of IFRS, the need to improve investors' IFRS understanding, and the audit regulation and standard-setting process. Additionally, the SEC also considered the impact on private companies, issuers and the regulatory environment.Minimizing IFRS incorporation fatigue
"The FASB and the IASB are working on some of the most fundamental standards in terms of accounting, and I think there is concern that there is a certain level of fatigue in the system," Beswick noted, citing feedback that had been received from issuers. The acting chief accountant stressed the need to incorporate IFRS "in a rational manner that doesn't overtax the system," and acknowledged the acute concern about conversion costs and accompanying burdens—something of which he said the staff is acutely aware.
Beswick's colleague, Craig Olinger, deputy chief accountant of the SEC's Division of Corporate Finance, also spoke on the panel. He noted that most of the SEC's approximately 9,000 domestic registrants use U.S. Generally Accepted Accounting Principles, while its 1,000 foreign registrants are more evenly divided between GAAP and IFRS.