IFRS omitted as US considers global accounting standard

Plans to converge accounting standards moved a step forward after the US Securities and Exchange Commission (SEC) announced it would look at whether a single set of global accounting standards was feasible. But a document setting out the proposals fails to mention the existing International Financial Reporting Standards (IFRS), which has already become the “de facto global language for financial reporting”.

Describing its vision for 2014 through to 2018, the SEC said it will “continue to promote the establishment of high-quality accounting standards by independent standard setters in order to meet the needs of investors”.

It added: “Due to the increasingly global nature of the capital markets, the agency will work to promote higher quality financial reporting worldwide and will consider, among other things, whether a single set of high-quality global accounting standards is achievable.”

The SEC is yet to decide on adoption of IFRS despite years of study. Recently SEC chief accountant Paul Beswick suggested that duties relating to federal legislation in the US has prevented it from devoting enough time to considering IFRS.

But it seems the US is out of step with most other countries in this regard. Research commissioned by the IFRS Foundation shows the financial reporting regime is required for all or most listed companies in 101 countries around the world. This amounted to 83 per cent of the 122 countries it surveyed. Ninety per cent of these countries allow it for non-listed companies.

A 2012 report on US adoption of IFRS from the SEC said the standards produced by the International Accounting Standards Board (IASB) were of a high quality. But it said adoption would be expensive for American firms, while also questioning certain areas requiring more development.

“US GAAP also contains areas for which guidance is in need of continued development, but the perception among US constituents is that the ‘gap’ in IFRS is greater,” the SEC explained in the 127-page report.

The SEC may be moving closer to IFRS adoption, but it seems that progress remains slow.