The Great IFRS Debate just won't die, will it?
Not that we really expected it to. This issue is so hot, it's temperature is to be continued.
A couple of recent pieces in the news, though, have turned the heat up a bit.
First came the AICPA, which told the SEC recently that, despite whatever direction the Commission eventually settles on, U.S. companies should be given the option of adopting IFRS.
“An adoption option would provide a level of consistency in the treatment of U.S. companies and foreign private issuers that report under IFRS that does not exist today, and would facilitate the comparison of U.S. companies that elect IFRS with their non-U.S. competitors that use IFRS,” AICPA Chair Paul Stahlin and CEO Barry Melancon write in a letter to the SEC. “Furthermore, giving U.S. companies an option to adopt IFRS as issued by the IASB would be another important step towards achieving the goal of incorporating IFRS into the U.S. financial reporting system.”
Sounds reasonable. Even if the SEC decides IFRS is not the way to go, U.S. companies should be given the option of adopting it.
When it comes to the United States and IFRS, though, “optional” is not the word the international community is looking for.
Robert Hodgkinson, executive director of the Institute of Chartered Accountants in England and Wales, says the “dream of uniform worldwide standards” could be jeopardized if the United States refuses to adopt IFRS.
“Asian nations are 'sitting on the fence' towards adoption,” Hodgkinson argues in this GFS News article, “meaning that the Securities and Exchange Commission's decision on whether to adopt the standards has become 'critical' to achieving a single model for worlwide accounting.”
In other words, according to Hodgkinson, if the U.S. doesn't sign up, other key nations like Japan and India might not, either.
Of course, it's not like the U.S. won't have to deal with IFRS anyway. Let's revisit the words of Peter Margaritis, an instructor with the Business Learning Institute and president of IFRS Education and Training, LLC:
“IFRS is already here through the back door, and it's not going to go away, even if the SEC says, 'We're not going to do this.' You've got Canada, Mexico — all the major economies throughout the world are using IFRS. We will run into it somewhere down the line — and that's if the United States doesn't adopt it. I believe we will.”
The bottom line: We might as well cozy up to the IFRS notion. It's going to be here for a while.
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