Interest in Adopting IFRS Accounting Grows Among US Firms
Interest in adopting International Financial Reporting Standards appears to growing among US companies, according to a new survey by Deloitte & Touche.
Preliminary results of the survey show that approximately 20% of CFOs and senior finance professionals (representing approximately 300 U.S. companies) would consider adopting IFRS, if given a choice by the Securities and Exchange Commission. Approximately two-thirds of those companies would consider adopting IFRS within the next three years.
While interest in adopting IFRS exists, the survey results indicate that companies believe their personnel lack sufficient knowledge of IFRS to make the conversion and to maintain IFRS financial statements, both among domestic and non-US operations. More than half those companies considering IFRS say they lack skilled resources in their US operations, while approximately one-third felt they lacked skilled resources in their non-US operations.
As more companies outside the US report using IFRS, there will likely be increasing pressure on US companies to do the same.
The survey follows the recent concept release by the SEC on whether US companies should be permitted to prepare their financial statements using IFRS, as published by the International Accounting Standards Board (IASB). On the basis of the responses received, it is possible that by 2010 or 2011, US companies may have a choice of IFRS or US generally accepted accounting principles (GAAP) for public reporting purposes in the United States.
The SEC identified the lack of experience in preparing IFRS financial statements in the US market as a potential issue in its concept release and asks what implementation concerns should be considered by the SEC.
Approximately 20% of US companies say they have insufficient knowledge to determine whether they would consider adopting IFRS, if given a choice. Another 15% were undecided as to whether they would or would not consider IFRS adoption.
Approximately 40% of the Fortune Global 500 companies currently use IFRS, and that percentage will increase in the next couple of years as countries like Canada and Brazil move to IFRS.
Interest in adopting IFRS should grow once US companies become more familiar with the standards.
About one-third of companies that indicated they would not consider adopting IFRS felt the most significant obstacle is that IFRS are not viewed as acceptable as US GAAP by investors and analysts. As many investors and analysts have accepted IFRS as a reporting basis, it appears that more education is needed in helping companies understand how investors and analysts view IFRS, Deloitte said.
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