Back in the day, the Securities and Exchange Commission gave full-throated support to a transition from GAAP to IFRS accounting. The U.S. was part of a global economy and needed to share global accounting practices and that meant going the IFRS way. Standardization would bring fairness and ease of comparison to world balance sheets. Now we have President Obama and an SEC under new management, which in 2011 will decide whether or not mandatory conversion to IFRS is for the greater good. As a result, the prospect of early adoption by U.S. companies is fading, according to a new study released by the Financial Executives Research Foundation.
“There has been a 180-degree view change by the administration and the SEC,” says Cheryl Graziano, vice president of research and operations at FERF. “From what we have been hearing from our constituents, our sense is that moving to IFRS is no longer as much of a priority.”
There are also concerns that the politics of re-regulation may get in the way of such a transition. There is talk of creating a monitoring board comprising regulators and accountants to smooth convergence and prevent politicization of the process. Meantime, the SEC is welcoming comments on the proposed shift from GAAP to IFRS through April 20.