Before the credit crisis hit, the Securities and Exchange Commission and financial industry regulators were ready to begin moving publicly traded companies from U.S. Generally Acceptable Accounting Principles to the International Financial Reporting Standards. In fact, according to a CFO.com piece published Thursday, the SEC was scheduled to release its transition plan for comment Friday.
But as writer Tim Reason points out, the economic and political climate now is much different from the climate earlier in the year. He says:
Beginning with the bankruptcy of Lehman Brothers on September 15, the financial and accounting world has undergone an historic upheaval.... With Democrats in charge of both houses of Congress and in the White House, it's likely that a move to IFRS -- championed by a Republican and criticized by some as a covert move toward looser financial regulation -- will be scrutinized come January as part of a broader look at financial regulation.
Moreover, because the SEC has not yet been able to open its plan for comment, there's no real way to determine what those who would be affected by the plan think about it. What about the companies or their investors? How do the accounting firms feel about it? Those who are opposed to IFRS have been the most vocal so far, says Reason. For instance, Public Company Accounting Oversight Board member Charles Niemeier told a gathering of the New York State Society of CPAs that the Financial Accounting Standards Board and the International Accounting Standards Board should not be hurried to come up with a converged set of standards, but should instead focus on the quality of the resulting converged standards.
On the other side of the argument, Reason notes, are those like Deloitte & Touche partner D.J. Gannon and IASB representative Mark Byatt, who agree that now is the perfect time for renewing the IFRS discussion because the current crisis demonstrates how global and interdependent respective markets have become.