SEC proposes IFRS roadmap

Sets tentative date for mandatory filing at 2014

The SEC is publishing for comment a proposed roadmap for adoption of International Financial Reporting Standards (IFRS) by U.S. public issuers that file with the SEC. The outline sets a tentative effective date for 2014 for mandatory filings using IFRS.

The roadmap sets out several key dates and milestones which include:

• 2010: Limited group could first use IFRS on an optional basis for filings for years ending in 2009
• 2011: SEC to evaluate seven milestones and make a decision whether to adopt IFRS mandatory requirement
• 2014: Effective date for mandatory requirement for filing financial statements using IFRS

In 2011, the SEC could determine when and if to make a mandatory requirement for filing using IFRS. Should the decision to mandate IFRS in 2014 be made, the SEC could open the window for more early adopters to begin filing using IFRS.

The major milestones outlined in the roadmap include improvements in accounting standards with a transition to IFRS and building a stable funding source for the international standards body to ensure its independence. As they evaluate milestones, the SEC will also analyze the market reactions to IFRS and the costs incurred.

In his comments, SEC Chairman Christopher Cox noted that over 100 countries, including all of Europe, now submit financials using IFRS with more planning to adopt the standards, including Canada. “If we do nothing, comparability and transparency will decrease for U.S. investors,” Cox explained, stressing that the SEC is duty-bound to consider adoption and usage of IFRS.

Questions from the commissioners today included issues about the future of FASB, monitoring global effectiveness of standards, and the potential for more early adopters.

“The SEC is taking a significant step toward towards its goal of adopting a single set of high quality global standards,” SEC Commissioner Kathleen L. Casey said in her comments.

There is a 60 day comment period that will begin once the proposal is published in the Federal Register.

Follow IFRS on the Society’s IFRS home page.

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