IFRS

Overview: International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). IASs were issued between 1973 and 2001 by the board of the International Accounting Standards Committee (IASC). In April 2001 the IASB adopted all IASs and continued their development, calling the new standards IFRS. IFRSs are considered "principles-based" sets of standards in that they establish broad rules as well as dictating specific treatments.

The SEC has proposed a “roadmap” for phasing in mandatory IFRS filings by U.S. public companies beginning for years ending after December 15, 2014. The roadmap is conditional on progress towards “milestones” that would demonstrate improvements in both the infrastructure of international standard setting and the preparation of the U.S. financial-reporting community. If the conditional milestones are satisfactorily achieved by 2011, the SEC may then consider rulemaking to phase in requirements for U.S. public companies to file financial statements using IFRS as issued by the IASB. Some U.S. public companies that operate within an “IFRS industry” would be permitted to begin using IFRS as soon as next year’s financial statements if the proposal is adopted unchanged. The comment period ends February 19, 2009. If the proposal is adopted, the final roadmap would next be published in the SEC’s Codification of Financial Reporting Policies, a step that would allow the SEC to update or revise the roadmap, including its timeline, as circumstances change.

U.S. public companies that are either (i) in an IFRS-Reporting industry, or (ii) are in the top 20 of their respective industry, would be allowed to begin filing IFRS financial statements as soon as for years ending on or after December 15, 2009. However, the permission would be restricted to reporting in IFRS as issued by the IASB and would have to be approved by the SEC staff.

Services: The convergence to IFRS is a seemingly, and rightfully, slow process as the shift to “principles-based” accounting gains acceptance by the accounting community (both public and private accountants). US accountants have become accustomed to bright lines and a wealth of interpretive guidance that won’t be present once convergence is complete. Indeed, this is a profound shift. However, the effects of the ultimate convergence should be considered and mapped; not just by domestic companies, but by Foreign Private Issuers (FPI) that currently report under IFRS.

We have emphasized in the overview that the SEC roadmap provides for the filing of financial statements using IFRS, as issued by the IASB. In our International dealings we have found that the vast majority of countries that have adopted IFRS have, in fact, adopted their own versions. We refer to these as variants; that is, versions of IFRS not necessarily as issued by the IASB. Accordingly, the mapping process for these companies is equally appropriate to prepare for filing in the US under IFRS. We’re available to assist companies with this mapping process, which is designed to provide an understandable current-state, future-state analysis of the ultimate conversion to IFRS.

Please take a moment to read an article on IFRS, published by CFO.com that, in part, resulted from an interview of our Managing Director, William Lougheed:

http://www.cfo.com/article.cfm/12032974?f=search