Summary: It’s becoming increasingly likely that the U.S. may back away from an SEC proposal to make a wholesale adoption of IFRS. Instead, the pendulum seems to be switching to focusing on the continued convergence of U.S. GAAP with the international rules.

The U.S. may not be keeping pace with the rest of the world’s migration to a single set of accounting standards. But judging from the statements of several speakers at the AICPA’s April 30, 2009, International Business, Accounting Auditing and Tax Conference, in Washington, that may not be such a bad thing.

Colleen Cunningham, a global managing director with Resources Global Professionals, said SEC Chairman Mary Schapiro has made it clear that she is reluctant to move ahead on adopting IFRS. With the chief accountant’s post remaining vacant more than three months after Schapiro took over the agency’s helm, it’s still unclear where the SEC may ultimately go with regard to the international rulebook. “Who is named as the SEC chief accountant will set the tone, and I think we’ll have at least an understanding of where Mary’s head is as far as moving us forward or not,” Cunningham said.

For example, PCAOB member Charles Niemeier has been mentioned as a possible candidate. (See Chief Accountant Pick May Set Tone For Schapiro’s Agenda in the March 11, 2009, edition of Accounting & Compliance Alert.) Cunningham said that if Schapiro appoints Niemeier, a clear message would be sent, and she called him “one of the most outspoken” proponents of moving ahead with convergence as opposed to conversion. She added that Paul Volcker’s name is also floating around as a possibility. Volcker is a former chairman of the Federal Reserve and is currently chairman of President Barack Obama’s Economic Recovery Advisory Board. The 81-year-old Volcker served as chairman of the International Accounting Standards Committee Foundation, the oversight body of the IASB, earlier this decade, but most Washington analysts consider him an unlikely candidate for a position that would require a full-time commitment.

Speakers mostly agreed that IFRS will be adopted, even if a does not happen via a wholesale switch like the one proposed by the SEC in Release No. 33-8982 Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers. Renee Bomchill, a director at Deloitte & Touche LLP in New York, said her firm had clients that were ready to make the switch and thought they would be in full conversion mode by now. However, since the likelihood of a change in the next few years has decreased, some of those companies are now waiting before they devote too many resources to changing accounting practices. While Bomchill said she still believes the international standards will be adopted, Mary Kane, the director of financial compliance and procedures at Johnson & Johnson, is not so sure. Senior officials at the consumer products supplier believe there is a real possibility the SEC may not go through with adopting the standards.

Many attendees at the conference also said the FASB and IASB need to work harder on convergence. Recently, there has been some confusion as to whether deadlines in the FASB and IASB’s Memorandum of Understanding, which was updated in September 2008, can still be met. IASB member James Leisenring, who was member of the FASB before joining the international board, said the FASB and IASB can not be expected to create two sets of standards that are identical. Instead, both boards will continue to form a consensus on individual projects, and ultimately convergence will occur.

Source:  WG&L Accounting & Compliance Alert Checkpoint 5/1/09