Not all that long ago, U.S. and European regulators were working feverishly to see U.S. Generally Acceptable Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) reconciled and converged so that companies listed on U.S. exchanges and exchanges in other countries could apply a single accounting standard and not have to "reinvent the wheel," so to speak, just because they needed to file financial statements in more than one place.
What's more, officials with the Securities and Exchange Commission adopted rules requiring companies to file certain financial records with the agency using eXtensible Business Reporting Language, or XBRL. The move was intended to make company financial information more accessible to investors and to provide more transparency into a corporation's financial condition.
But when the administration changed hands and SEC Chair Mary Schapiro took the helm, neither IFRS nor XBRL were high on the "to do" list. Instead, the agency focused more on enforcement efforts and implementing the regulatory overhaul of the financial sector promised and then passed by Congress.
As a result, any news involving either standard almost seems like an anachronism. Adopting the international standards is just not a priority anymore. And according to a Grant Thorton study released earlier this month, I'm not the only one who thinks so.
In fact, 49 percent of chief financial officers responding to the study said IFRS should only be adopted in the U.S. after IFRS and U.S. GAAP have converged to the point that differences are inconsequential, which won't be for another five to seven years. Only 24 percent said the international standards should be adopted as soon as possible.
In a statement, Grant Thorton CEO Stephen Chipman said:
[T]here is still much work to be done in educating the U.S. financial community on the benefits of IFRS. We have been, and continue to be, staunch supporters of the ongoing movement toward one set of high-quality, globally accepted accounting standards ... Just as international business has benefitted over the last 30-odd years from the increased shared use of English, so too will global companies reap the benefits of one financial reporting language.
The survey also revealed that very few respondents have any use for XBRL. Eighty percent said they do not use XBRL now, and 76 percent said they have no plans to do so in the future.
What a difference two years can make.