Ms Seidman spoke first, summarising the points of the FAF comment letter to the SEC in which it expresses "strong support for IFRS becoming the foundation for future accounting standards, but also offers constructive suggestions to mitigate the transition risks that have been identified". On the topic of convergence, Ms Seidman echoed comments made by Mr Hoogervorst at a recent IFRS conference in Australia in saying "the side-by-side convergence model is not the optimal model in the long run".
In discussing the approach the United States may take to the adoption of IFRS in more detail, and the FASB's ongoing role, Ms Seidman made the following comments:
We always are going to need a nimble, responsive body to address important matters in the U.S. In cases where other countries share the issue, we would hope to convince the IASB or IFRIC to take up the issue and then participate in the process. But, if they don’t, we would address the issue for the U.S., and then the IASB could later consider the standard for broader use.
There are a couple of things to think about here. The IASB is in the process of a global agenda consultation, which has been long awaited by many parts of the world. We would expect the IASB to add projects to address those regional concerns. Second, many parties are calling for a period of calm to allow them to transition to the new standards, and for the IASB to focus on the Conceptual Framework for the next few years. But I have yet to experience a period of calm as an accountant in the U.S., and I expect pressing matters to continue to emerge that require our prompt attention. So you can think of this as a safety net if you like, but something that is very important in our culture.
In his speech, Mr Hoogervorst noted that the endorsement of IFRSs is used in most parts of the world, but he noted "there should be a clear timeline for the completion of the initial 'endorsement process'" in the US. He also raised the participation of national standards setters in the IASB's due process, noting "more institutional arrangement for engaging national standard-setters and regional bodies concerned with accounting standards is needed".
Mr Hoogervorst also discussed the possibility of allowing US companies the option of adopting IFRS, noting that certain US companies were already calling for "a single set of high quality standards and IFRSs being the most effective means to accomplish that objective". Mr Hoogervorst continued:
Companies like these have been leading the way in terms of consolidating and coordinating their international financial reporting. I think providing a limited number of such US companies with the option to use IFRSs for their US consolidated financial reporting would offer a good test of IFRSs.
I know that there are inevitable concerns about having two GAAPs in the US marketplace. However, if the major competitors of such companies are using IFRSs, comparability will actually increase. Comparability could be further assured if those competitors were foreign private issuers in the US, already subject to SEC review.
From a global perspective, such a limited and early option to use IFRSs would provide a clear signal of a US commitment to IFRSs.