‘Ready, set, wait!’ was the message the SEC delivered to US issuers this week concerning the long anticipated guidance on switching to International Financial Reporting Standards (IFRS).
Speaking before the American Institute of Certified Public Accountants (AICPA) meeting in Washington, DC, on Tuesday, the SEC’s chief accountant James Kroeker said commission staff ‘will need a measure of a few additional months time to produce a final report’.
Kroeker said he was open to considering whether to retain US GAAP as the basis for financial reporting in the States.
While he did not specifically mention it, the SEC had floated a hybrid approach at the AICPA conference a year ago called ‘condorsement’.
This approach would allow US companies to retain GAAP while bringing it into line with IFRS over a five to seven year period.
The SEC said it was concerned about the cost and complexity for US companies of adopting or ‘endorsing’ IFRS over GAAP.
‘A strong US voice’
Kroeker said he was ‘encouraged about the potential prospects of IFRS incorporation’ into US financial reporting, adding that any such move should include several elements; consistent global accounting standards; retention of US authority over standards applicable in the US capital markets; and maintaining ‘a strong US voice’ in establishing global standards.
Kroeker indicated he was less certain that international standards concerning financial instruments would be developed.
‘Unfortunately… prospects for a converged high quality solution are even more uncertain,’ he said.
Non-GAAP abuse called out
Separately, Meredith Cross, director of the SEC’s division of corporation finance, warned companies against abusing non-GAAP measures in roadshows and analyst conferences.
In a blog on the Wall Street Journal site, Cross was quoted as saying ‘knock it off’ when discussing abuse of non-GAAP measures, during a panel on financial reporting.
Read James Kroeker’s full remarks.
