More on International Convergence
Bob Lipe blogged last week on the SEC’s release of two documents related to their exploration of whether/how to integrate IFRS into US GAAP. Since the release of those documents, the SEC, IASB, and FASB have all made public statements that provide insights as to where regulators and standard-setters sit on this issue.
The least informative statement was made by the IASB Chair, Hans Hoogervorst. In a speech made at the IFRS Foundation conference in Australia, he stated that the convergence efforts by the IASB and the FASB have served their purpose, but it’s time to move on (see here). He further stated, “Whichever way the SEC goes, what is needed more than anything is clarity.” I label this the “least informative” statement because the IASB has long been calling for the SEC to just make a decision already, and they’ve campaigned for that decision to be some form of IFRS incorporation into US GAAP. Hoogervorst’s speech has the same tone as other statements made by the IASB indicating that the current cooperative model followed by the IASB and the FASB is not sustainable (see here).
A BNA article reports that yesterday, FASB Chair Leslie Seidman made similar comments at the AICPA’s National Conference on Current SEC & PCAOB Developments. Specifically, she indicated that the current convergence model followed by the Boards is not a long-run solution and would be challenging technically and administratively if applied beyond the current major joint projects on revenue recognition, leasing, financial instruments, and insurance contracts. “Plus we appreciate that the IASB as an international body must be responsive to the priorities of other countries that have already adopted [international financial reporting standards],” she said. In speaking about convergence “you might relate it to the words of American poet Ogden Nash, who said, ‘Progress might have been alright once, but it has gone on too long.’” These comments seem to project the same message conveyed by Hoogervorst that standard-setters are ready for some new direction from regulators on how the Boards are to work together going forward. Chairman Seidman also provided in her speech yesterday a vision for the FASB’s role if the SEC were to decide on the FAF’s proposed approach written in a letter to the SEC last month (broadly consistent with the SEC’s “condorsement” approach).
The third piece of news comes from the same AICPA conference when Jim Kroeker, Chief Accountant at the SEC, indicated that the SEC’s eagerly awaited decision on IFRS adoption will not be forthcoming, as promised, sometime this year (see here). Instead, Kroeker indicated that a few more months are needed for the SEC staff to complete their work plan and submit a completed report to the commissioners. The announcement by Kroeker likely disappoints not only standard-setters, but also preparers, auditors, and users. Perhaps to lessen the disappointment, Kroeker made this statement suggesting that some form of IFRS integration into US GAAP is a strong possibility, “I’m encouraged for the prospect of incorporation of IFRS.”