Tag Archives: Convergence

May 10, 2011

IFRS: The Saga Drags On…

I’m sure many of my readers have been disappointed that I haven’t been writing much about accounting lately, so today I take a look at the status of IFRS here in the United States.

IFRS: No News is Good News?
The fact is that there hasn’t really been much to report on IFRS lately. As my readers know, back in 2008, the SEC proposed a roadmap that would have required adoption of IFRS in the United States, phased in from 2014 to 2016. Then the economy collapsed and rushing headlong into IFRS seemed like maybe not such a good idea. More recently, there have apparently been some developments–that I do not understand in the least, so don’t ask me about them–relating to the accounting treatment of highly devalued debt securities that have also given regulators pause on the idea of wholesale adoption of IFRS here in the United States.

In February of last year, the SEC announced that it backed off on the roadmap a bit and would make a decision in 2011 as to whether or not IFRS should be adopted in the United States. I expect that it will be several more months before the SEC announces its decision.

Condorsement?

More recently, the idea of “condorsement” has been proposed. Under this approach, rather than requiring adoption of IFRS, U.S. GAAP would continue to exist, but FASB would work towards converging our standards to IFRS on a standard-by-standard basis. I admit that I am a little fuzzy on how condorsement differs from convergence. I would offer ten points to anyone that can explain it, but, to be honest, I don’t think I really want to know.

Convergence

Speaking of convergence, the FASB and IASB have an ongoing program designed to achieve this goal for projects specified under a memorandum of understanding (issued in 2006 and updated in 2008). Last month, they announced that five of the projects had been completed and the remaining three will be completed in the second half of 2011 (a slight delay from the original schedule). None of the projects relate to stock compensation, however. Phew.

SEC Roundtable

At the same time that the FASB and IASB announced the progress on their convergence project, the SEC announced that it will sponsor a Roundtable on July 7, 2011 to discuss incorporating IFRS into the U.S. financial reporting system.

A news bulletin issued by Morrison and Foerster discusses the FASB/IASB and SEC announcements.

Share Withholding: No News is Bad News

A key difference between IFRS 2 and ASC 718 is that, under IFRS 2, liability treatment is required any time shares are withheld by the company to cover tax withholding. I think many of us harbor a secret hope that this will somehow change before IFRS is required in the United States (either that, or that IFRS is never required and this somehow is left out of convergence/condorsement). So far, however, no such luck. A PricewaterhouseCoopers alert issued in September of last year reports that the Interpretations committee of the IASB refused to carve out an exception. The committee felt it did not have the authority to do so; the matter can still be presented to the IASB for relief.

Save Big on NASPP Conference by Completing Survey
NASPP members that complete the NASPP’s 2011 Domestic Stock Plan Administration Survey (co-sponsored by Deloitte) by this Friday, May 13, can save 10% off the early-bird rate for the 19th Annual NASPP Conference (which is already a significant savings off the regular registration rate). Register to complete the survey today–so you don’t have to explain to your boss why you missed out on this rate.

Only Ten Days Left for NASPP Conference Early-Bird Rate
It’s hard to believe how time flies, but the 19th Annual NASPP Conference early-bird rate expires this Friday, May 13. This deadline will not be extended–register for the Conference today, so you don’t miss out.

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog.

Register for 19th Annual NASPP Conference (November 1-4 in San Francisco). Don’t wait; the early-bird rate is only available until May 13.
Participate in the NASPP’s 2011 Domestic Stock Plan Administration Survey (co-sponsored by Deloitte, with survey systems support provided by the CEP Institute).
Check out the NASPP’s Facebook and Twitter pages.
Register for the NASPP’s newest online course, “Financial Reporting for Equity Compensation.”
Complete the Compliance-O-Meter quiz on Transfer Agents.
Take the “Question of the Week” challenge.
Renew your NASPP membership for 2011 (if you aren’t an NASPP member, join today).
If you are in the Dallas area, attend the Dallas NASPP chapter meeting this Thursday, May 12.

– Barbara

Tags: accounting, Condorsement, Convergence, GAAP, IFRS, share withholding

March 2, 2010

SEC Addresses IFRS Adoption Concerns

The SEC released a Statement last Wednesday addressing many of the concerns raised during the comments period for the proposed Roadmap for transitioning U.S. issuers to a high-quality global accounting standard, presumably IFRS. Although the SEC confirmed its commitment to an impending convergence and adoption of a single set of global accounting standards, the SEC really appears to have taken a serious look at the potential impediments to adopting IFRS as a single global accounting standard.

More Time

In the 2008 proposed Roadmap, the SEC set 2011 as the date when a determination will be made on the viability of adopting IFRS for U.S. issuers; and last week’s Statement keeps 2011 as the target date for that determination. What has changed is that the original Roadmap would have required, should the 2011 determination be made if favor of transition, the adoption of IFRS starting in 2014. This date is pushed out to 2015 as the earliest adoption date (pending the determination).

Preparing for a Determination

The milestones set by the proposed Roadmap are still in place as a baseline requirement for the SEC to make its 2011 determination. In addition, the SEC Statement stresses that convergence between FASB and IFRS will be an essential step in preparing for a determination. What this new Statement expands on is additional preparation by way of a Work Plan designed to position the SEC to make a solid determination. This Work Plan clearly reflects the SECs commitment to addressing concerns raised in the comments on the Roadmap. The Work Plan delves into analyzing the viability of IFRS as a high-quality global accounting standard and also evaluating the potential benefits and costs associated with U.S. adoption. Specifically, through the Work Plan, SEC staff will strive to:

Determine if IFRS is sufficiently developed and consistently applied;
Ensure that global accounting standards are independently set and are for the benefit of investors;
Provide investor understanding and education on IFRS;
Examine how a change in accounting standards will impact U.S. regulatory environment;
Determine full impact on issuers (both large and small);
Establish the readiness of U.S. financial statement preparers and auditors to make the conversion to IFRS.

Reactions

Although concerns over the viability of IFRS adoption in the U.S. are still prevalent, there is a general consensus that an international accounting standard is desirable, even inevitable. The Work Plan outlined in the SEC’s Statement was well-received, even if there are still major roadblocks to be overcome. There’s a lot to be done before next year’s determination is made to get not only the SEC, but also U.S. issuers and investors ready!

In a prepared speech, SEC Commissioner Luis A. Aguilar expressed some concerns around IFRS, including potential discretion afforded to financial statement preparers under IFRS, the ability to audit and enforce IFRS-based accounting standards, and whether or not adopting IFRS is ultimately in the best interest of investors.

The AICPA issued a statement supporting the move to a global accounting standard, but also urging the SEC to provide a certain date for IFRS adoption.

In a press release, CAQ Director Cindy Fornelli expressed her support and commitment to work with the SEC on carrying out the Work Plan.

FEI issued a statement applauding the SEC for developing the Work Plan.

More Information on IFRS

Although the SEC isn’t ready to say for certain if IFRS will ultimately be the “high-quality global accounting standard” that both the Roadmap and the Statement call for, it is certain that continued convergence between U.S. GAAP and IFRS will be ongoing. In addition, U.S. companies with overseas subsidiaries may need to adopt IFRS before any general transition, at least for the subsidiary. If you want to learn more about IFRS, check out our recorded webcast, “The Race to IFRS-Don’t be Left Behind”, the “IFRS–A Lesson in Implementation” session materials from our 2009 Conference (under Accounting, Auditing and Controls), and Deloitte’s guide to IFRS posted to our Document Library.

-Rachel

Tags: Convergence, FASB, GAAP, IFRS, Roadmap, SEC, Work Plan