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ACCA report on IFRS in the US

  • ACCA (UK Association of Chartered Certified Accountants) (lt green) Image

16 Nov 2012

The Association of Chartered Certified Accountants (ACCA) has released a research report 'IFRS in the US: An investor's perspective' that outlines the outcome of a survey of nearly 500 US-based investors (professional investment managers, asset managers and fund managers) which asked whether they believe the US Securities and Exchange Commission (SEC) will eventually adopt IFRS. The survey resulted in 57 percent of investors surveyed expecting the adoption of IFRS in the US to occur 'one-day', with the long term benefits outweighing the costs.

According to Sue Almond, Technical Director at ACCA, "More investors believe the eventual adoption of IFRS in the USA will result in a net benefit to the American economy than not. In ACCA's view, US adoption of IFRS would give a tremendous boost to the cause of globally comparable financial reporting, and more importantly, the US and world economies. ACCA has repeatedly called for putting investors at the heart of the standard-setting process globally, and this is why we commissioned this research, to understand what American investors thought about the future of IFRS in the USA."

Chairman Hans Hoogervorst also weighed in with his thoughts on the ACCA results, "The ACCA's findings are consistent with anecdotal feedback we hear from the US investor community. They also lend further credence to the argument that the USA is well prepared for a successful transition to IFRS."

The report also identified several key findings investors have noted in regards to the adoption of IFRS, as follows:

  • The most informed investors polled believe it will take US corporates some four and a half years to be ready for IFRS. They ask that convergence plans aim for full convergence, allowing adequate time for investors and industry to adjust.
  • Awareness of IFRS among US-based investors is modest: when asked, only 34% of investors felt able to cite specific differences between US GAAP and IFRS.
  • However, 38% of investors said they were comfortable comparing statements prepared under IFRS with statements prepared under US GAAP.
  • Investors saw marginal differences between IFRS and US GAAP, with 22% of investors claiming that the quality of disclosures under IFRS is higher, versus 25% who favoured US GAAP.
  • Among investors with a solid understanding of IFRS, however, the balance shifts to 40% to 21% in favour of IFRS.

Further, the report identified the main concerns US investors' have towards a move to IFRS. According to the report, these concerns are:

  • Will IFRS adoption lead to reduced complexity for US corporates?
  • Is IFRS adoption going to lead to a dangerous loss of US influence over the standard-setting process?
  • Are US corporates likely to see cost savings and synergies emerging as a result of IFRS adoption?
  • Will IFRS adoption make it easier to compare the performance of US corporates with that of other companies overseas?
  • Are US auditors likely to second-guess management more frequently as a result of IFRS adoption?

Click to view the ACCA's press release and the research report, "IFRS in the US: An investor's perspective" (links to ACCA website).

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