Until the Securities and Exchange Commission sets a firm date for any required conversion to International Financial Reporting Standards (IFRS), public companies aren't going to devote staff or budget to getting themselves ready.
That's the take-home message from a new Deloitte survey in which 75 percent of respondents supported a move to IFRS but 64 percent said they haven't assigned staff or budget to conversion.
"Given the implications IFRS adoption may have on a company, CFOs and executives are unwilling to dedicate significant resources until they have certainty around timing of IFRS adoption," says D.J. Gannon, leader of Deloitte's IFRS Center of Excellence.
Under the SEC's proposed IFRS roadmap, a final decision on whether to mandate IFRS won't be made until 2011.
Gannon estimates companies will typically need an 18- to 24-month lead time for conversion, from the point at which the SEC makes its decision and the earliest period presented in the company's first IFRS financial statements.
Companies with global operations already have accountants familiar with IFRS, but what about companies with only U.S. operations? "We've seen U.S. companies become more proactive on educating and training their employees on IFRS," Gannon says. "The good news is that knowing U.S. GAAP is a great starting place, as much of IFRS is based on U.S. GAAP. So, the key issue is changing mindset around financial reporting and focusing more on making judgments versus understanding detailed rules."
Change is Coming
Bruce Pounder, CMA, president of Leveraged Logic in Asheville, N.C., and chair of the Institute of Management Accountants' Small Business Committee, says IFRS knowledge is important to U.S. accountants - but not for the reasons they think.
As he explains in his book, the Convergence Guidebook for Corporate Financial Reporting, both U.S. GAAP and IFRS will change profoundly as the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) continue to converge the two sets of standards.
U.S. GAAP won't be replaced by IFRS. Rather, ongoing convergence efforts will render the two standards indistinguishable from each other. At that point, there'll be no need for two approaches that differ in name only.
"Any accountant whose knowledge, skills, and abilities are based solely on current U.S. GAAP can expect the convergence of U.S. GAAP and IFRS to dramatically alter their careers," Pounder says.
When to Study IFRS
If the standards are just going to merge, why bother to learn IFRS beforehand? "Current IFRS can provide insight into what future converged standards on certain topics are likely to be," Pounder replies. "Some - but certainly not all - provisions of current IFRS that differ from current U.S. GAAP are likely to survive intact in future converged standards. So in a few very specific areas, IFRS provides a preview of standards U.S. companies will eventually use."
The chances you'll need to know IFRS before it's required are slim, Pounder acknowledges. But, he adds, if you remain ignorant of how accounting is now done in the majority of countries outside the U.S., you risk becoming irrelevant in today's global economy.
Eventually, IFRS knowledge will move your resume to the top of the pile. "Accounting firms and corporations will face significant talent-management and other challenges arising from the convergence of U.S. GAAP and IFRS - challenges that most U.S. organizations are currently ill-prepared to handle," Pounder says.