About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Schapiro Confirms SEC is Still on Course to Meet 2011 Deadline for Decision on IFRS

Subscribe to our newsletter

Earlier this year, Securities and Exchange Commission (SEC) chairman Mary Schapiro indicated that the regulator would be kicking off research efforts into how best to move the US towards adopting International Financial Reporting Standards (IFRS). This week, Schapiro has confirmed that despite the revised standards development timetable announced by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB), the SEC is still hoping to be able to make a decision on whether to move to IFRS by the previously established 2011 deadline.

SEC staff has been charged with executing a work plan, the results of which it hopes will aid the regulator in its evaluation of the impact that the use of IFRS by US companies would have on the US securities market. Included in this work is consideration of IFRS, as it exists today and after the completion of various “convergence projects” currently underway between US and international accounting standards setters, which have recently been reprioritised by the FASB and IASB. By 2011, assuming completion of these convergence projects and the staff’s work plan, the SEC has pledged to decide whether to incorporate IFRS into the US market.

FASB and IASB have announced modifications to their timetable for and prioritisation of standards being developed under those boards’ joint agenda, which essentially means the project timeline has slipped by around six months. One of the reasons behind this is that groups like Financial Executives International have told the standards bodies that the large number of exposure drafts and proposed accounting standards updates expected in the next few months would be too much to absorb and respond to with comments in the previous timeline. Accordingly, the FASB and IASB will stagger the publication of exposure drafts and related consultations.

However, in spite of these timetable changes, the SEC is committed to its own deadline, according to Schapiro. “The boards believe that the modified plan will contribute to increased quality in the standards because it provides additional time for stakeholders to thoroughly consider the proposals and give both boards quality feedback. I view this as time that is well invested,” she explains.

“Quality financial reporting standards established through an independent process are threshold criteria against which the Commission’s future consideration of the role of IFRS in the US reporting system will be based. I foresee no reason that the adjustment to the targeted timeline for certain joint projects should impact the staff’s analyses under the work plan issued in February 2010, particularly when that adjustment is designed to enhance the quality of the standards. Indeed, focused efforts on those standards the boards consider highest priority for the improvement of US GAAP and IFRS will facilitate the staff’s analyses. Accordingly, I am confident that we continue to be on schedule for a Commission determination in 2011 about whether to incorporate IFRS into the financial reporting system for US issuers,” she concludes.

The move to IFRS by the US will have a significant impact on the pricing and valuations functions of internationally active financial institutions. Global harmonisation would allow for a more consolidated approach to this function, however such a change would take time. The US regulator has said that it expects US companies would need approximately a four to five year timeframe to successfully implement a change in their financial reporting systems to incorporate IFRS. Therefore, if the regulator determines in 2011 to incorporate IFRS into the US financial reporting system, the first time that US companies would report under such a system would be no earlier than 2015.

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: AI in Asset Management: Buy-Side Attitudes toward GenAI and LLMs

Date: 8 October 2024 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Since ChatGPT exploded onto the scene in late 2022, financial markets participants have been trying to understand the opportunities and risks posed by artificial intelligence and in particular generative AI (GenAI) and large language models (LLMs). While the full...

BLOG

Divisions Over Scope 3 Reporting Likely to Widen Amid New Data

New research indicates that investors want more Scope 3 emissions data and that corporations are pressing on with disclosure procedures, all despite recent regulatory back pedalling on the issue. Two studies indicate that the gathering and dissemination of supply-chain emissions information will be a key part of ESG integration even though it has been relegated...

EVENT

Buy AND Build: The Future of Capital Markets Technology, London

Buy AND Build: The Future of Capital Markets Technology London on September 19th at Marriott Hotel Canary Wharf London examines the latest changes and innovations in trading technology and explores how technology is being deployed to create an edge in sell side and buy side capital markets financial institutions.

GUIDE

Risk & Compliance

The current financial climate has meant that risk management and compliance requirements are never far from the minds of the boards of financial institutions. In order to meet the slew of regulations on the horizon, firms are being compelled to invest in their systems in order to cope with the new requirements. Data management is...