By Cydney Posner
The Wall Street Journal is reporting that the SEC intends to delay a decision on adoption of IFRS. Although the SEC staff expects to issue a final report on IFRS within weeks, according to the WSJ, "the report won't recommend to the agency's commissioners whether and how they should switch to the new standards, known as IFRS. The staff will make such a recommendation, but separate from the report, and there is no timetable, an SEC spokesman said. That suggests the SEC's much-delayed decision on the global rules will be pushed back even further, probably into next year." (IFRS is more of a principles-based system than US GAAP.)
The WSJ reports that many big accounting firms and multinational companies "favor a switch, saying it will help simplify the companies' accounting, ease global capital-raising and make it easier for investors to compare companies from different countries. But skeptics, especially among smaller companies that don't have foreign operations, say a switch would be costly and burdensome. Some also are uneasy at the idea of giving an international body the authority to write accounting rules for U.S. companies, though the U.S. is represented on the IASB."
There is speculation that the IFRS recommendation is being pushed into next year for political reasons: the staff may not want to take a stand on such a "far-reaching, potentially controversial issue before the November presidential election." Also, the current chief accountant is leaving the SEC this month, which could make implementation difficult until a new chief is named. According to the WSJ, although the "staff hasn't committed to its ultimate recommendation, staff members have long hinted that it will be for a compromise ‘endorsement' idea. [It's referred to elsewhere as "condorsement."] Under that plan, the U.S. would effectively switch to the global rules, but do so by gradually adopting them as part of U.S. GAAP, in order to minimize the cost and burden to companies of making the change. The U.S. would retain authority to modify or opt out of any future individual IFRS rules, though authorities expect that would be rare."