The adoption of International Financial Reporting Standards (IFRS) by US companies will change the role of financial professionals. On November 14, 2008, the SEC published its proposed roadmap for the adoption of IFRS in the US, thereby affirming the SEC’s focus on moving toward global accounting standards. In the Roadmap, the SEC did not set a final adoption date, but instead set several milestones that, if achieved, could lead to the required use of IFRS by US issuers beginning in 2014. Early adoption is in progress. allowed for qualified businesses for the period ending December 15, 2009.
Below are the highlights of the roadmap:
SEC roadmap
* 2009 – Early adoption allowed for qualified companies for periods ending December 15, 2009
* 2011-SEC will assess the success of early adopters and progress against predefined milestones.
* 2014- Filing IFRS for Accelerated Large Taxpayers for fiscal years ending on or after December 15, 2014.
* 2015- IFRS Filing for Accelerated Taxpayers for Fiscal Years Ending on or After December 15, 2015
* 2016- IFRS filing for non-accelerated taxpayers for fiscal years ending on or after December 15, 2016.
Regardless of when US companies are required to adopt IFRS, in the short term you can see continued convergence between US GAAP and IFRS accounting standards, followed by the final conversion to IFRS.
An agreement between the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”), called the Memorandum of Understanding (“MoU”), commits to improving both US GAAP and US GAAP. Like IFRS in 11 important current areas, such as revenue recognition, leasing, consolidation, financial instruments, debt and equity. The effects of these accounting changes go far beyond financial reporting.
We believe that adoption is inevitable and would also benefit investors and businesses as they move towards a single set of robust global accounting standards that ensure greater transparency across nations.
Steps US companies need to take to prepare for IFRS
-Understand the change: CEOs and CFOs of companies must be aware of the impact of IFRS on the entity, since the change affects not only the financial statements, but also other regulatory, legal or operational obligations that depend on the information financial
-Carry out an initial assessment – Hire IFRS advisors to perform a detailed and in-depth assessment of the process and current practices.
-Impact on foreign subsidiaries: Consider how the new adoption of standards will influence business across international borders. Long-term strategies, international taxation, financing and other processes may need to be re-examined.
-Corporate GR (Governance, Reporting and Compliance) Starting early is the key to avoiding big costs down the road.
-Strong planning: Companies must consider the short and long-term effect of the conversion and prepare a schedule to integrate them effectively into existing processes.
-Impact of IFRS on US companies Greater transparency.
-Initial assessment of differences in GAAP and IFRS accounting is necessary within a company
-Advanced accounting and financial systems necessary for IFRS accounting
-The transition will require a lot of work, such as double book maintenance, better information and reporting systems, and higher costs
While IFRS implementation focuses on public companies, private companies will soon adopt it too if they have foreign affiliates, foreign-based operations, or foreign-based investors, etc.