The deadline for the SEC to make a decision on whether or not to accept IFRS for domestic issuers is drawing near.  Obviously, this is an important decision that will have tremendous implications for accounting educators and the FASB.  In a recent speech in China, Hans Hoogervorst, the new Chairman of the IASB, commented that he expects a positive decision from the SEC regarding IFRS adoption:

“Difficult as the decision may be, it is hard to imagine the possibility of the United States not taking a positive decision.  … it is in the economic interest of the US to adopt IFRSs. As a signatory to G20 communiqués, the US has repeatedly expressed its support for global accounting standards.  But the main thing is this: if you believe in a global language for financial reporting, then IFRSs are the only possibility.  I am convinced that the United States will want to maintain its position of leadership in international financial reporting, and therefore it is hard to fathom a negative decision on the part of the SEC.”

While the above opinion might be biased, there is no question that the United States has demonstrated support for a single set of high quality standards that can be accepted worldwide.  However, is this really the correct course of action for the U.S. to take when U.S. GAAP is already the most developed set of standards in the world and arguably of higher quality than IFRS (of course, that could be debated)?  Then, there is the significant issue of whether the U.S. should give up their sovereignty over accounting standards. 

Why not simply continue with the working model established by the Memo of Understanding of working closely with the IASB in establishing standards that, while perhaps not exactly the same, are converged in most material respects while maintaining nuances based on differences of opinion on what constitutes the most decision-useful information?  Interestingly, the IASB’s vice chairman, Ian Mackintosh, was quoted as saying that joint work between the IASB and FASB would be less going forward if the SEC’s decision was to not adopt IFRS (click here for the article).  That comment is difficult for me to understand as I believe both boards have benefited from the cooperation. 

I know this is an area where academic research has something to say.  I would be interested in receiving feedback as to what inferences can be made from specific studies (either published or in working paper form) with respect to whether the U.S. should allow IFRS for domestic filers. 

The topic of our next Roundtable will be on international convergence.  I am pleased that Russell Golden, a FASB Board Member, will speak to us and give us his perspective on the challenges and opportunities related to international convergence.  If you are interested in this topic, and I suspect most of us are, then this Roundtable provides a unique opportunity for you to gain a better understanding of what U.S. standard setters are thinking about the topic. 

A formal announcement and details on how to join the Roundtable discussion will be forthcoming, but for now place a holder on your calendar to join us August 30th, at 4:00 pm eastern time.