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The SEC's Aug. 28 decision to publish its International Financial Reporting Standards transition road map commences the involved process of moving U.S. companies from the GAAP standards they have been familiar with for decades to the international accounting standards used by more than 100 countries.
If the road map's preliminary milestones, including increased IFRS training and a move toward a more independent source of funding for the International Accounting Standards Board, are met, the SEC's plan would lead to the mandatory use of IFRS by U.S. issuers in 2014.
The SEC will decide in 2011 after analysis of these milestones if the move to IFRS is in the best interest of investors and the public.
Lisa Filomia-Aktas, a partner in financial services accounting advisory services at Ernst & Young, told SNL that the road map is a key step toward approaching a global standard of accounting, especially when two-thirds of U.S. investors have investments in foreign entities that report using IFRS.
"To enhance comparability for investors, and transparency, moving to one set of accounting standards makes a lot of sense, and the world seems to have chosen IFRS at this point."
Filomia-Aktas said the plan would prescribe a three-year roll-out, depending on company size...