As 2015 draws to a close, we wanted to provide updates on International Financial Reporting Standards (IFRS) and its adoption in the U.S.
In the early aughts, it seemed more a matter of when than if the U.S. would adopt IFRS, but recent pronouncements indicate that the U.S. is further away from adopting the accounting standards.
In July 2012, the SEC issued the report ”Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers.” The report identified a number of unresolved issues that could impact the incorporation of IFRS into the U.S., including:
- How IFRS accounting standards are applied, enforced, and interpreted in various world jurisdictions
- The cost of adopting IFRS
- IFRS is not comprehensive to certain U.S. industries or types of common transactions
This report did not make any recommendations to the SEC on adoption of IFRS or a roadmap to adoption.
In June 2015 at the 34th Annual SEC and Financial Reporting Institute Conference, James Schnurr (Chief Accountant at the SEC) indicated that his staff had “heard from a number of different constituents about IFRS: investors, auditors, regulators and standard-setters. We heard three themes through those discussions:
- There is virtually no support to have the SEC mandate IFRS for all registrants
- There is little support for the SEC to provide an option allowing domestic registrants to prepare their financial statements under IFRS
- There is continued support for the objective of a single set of high-quality, globally accepted accounting standards.”
Although full-scale adoption of IFRS in the U.S. does not appear to be on the immediate horizon, it is still very pertinent for many U.S. businesses. Most of the world’s capital markets now require IFRS — only a handful of the G20 countries are not on IFRS, and of those few, most plan to adopt in the near future. Many U.S.-registered companies with international operations are required to file in countries where IFRS has been adopted.
Learn how to configure Oracle Hyperion Financial Management (HFM) to meet IFRS reporting requirements in our white paper, Supporting Multi-GAAP & IFRS Reporting Requirements with HFM.