The proposal provides that SEC will decide in 2011 if U.S. should pass laws that issuers must use IFRS beginning in 2014. Also provided are provisions for early adoption beginning in 2010 for certain issuers.
Critical points of the proposals:
- Improvements in accounting standards
- The accountability and funding of the International Accounting Standards Committee Foundation
- Improvement in the ability to use interactive data for IFRS reporting
- Education and training in the U.S. relating to IFRS
- Limited early use of IFRS, beginning with filings in 2010, where this would enhance comparability for U.S. investors. Eligibility would be based on both the prevalence of the use of IFRS and the significance of the issuer in a given industry. The SEC estimates that a minimum of 110 companies could be eligible.
- The anticipated timing of future rulemaking by the Commission
- Implementation of the mandatory use of IFRS, including considerations relating to whether any mandatory use of IFRS should be staged or sequenced among groups of companies based on their market capitalization.
Under a staged transition, IFRS filings would begin for large accelerated filers for fiscal years ending on or after Dec. 15, 2014. Remaining accelerated filers would begin IFRS filings for years ending on or after Dec. 15, 2015. Non-accelerated filers, including smaller reporting companies, would begin IFRS filings for years ending on or after Dec. 15, 2016.
The Commission believes a staged rollout would help mitigate the costs of the shift to issuers and the resource demands on auditors, consultants and others. The Commission acknowledges in the document that a staged rollout would lead to a lack of comparability of financial information and would temporarily create a dual system of reporting that would require investors to be familiar with U.S. GAAP and IFRS.
The road map spells out two alternative proposals under which U.S. issuers that elect to use IFRS would disclose U.S. GAAP information.
You can read the roadmap here:
