The year-end is a time for taking stock. The world of IFRS is steadily developing, as events in Washington, London, and the Far East, have recently shown.

What Ian Mackintosh, the IASB’s deputy-chairman, recently called ‘the maturing of IFRS’ came as a bit of a surprise. Those close to the process tend to see it as more of a constant technical give-and-take, a world of roundtables, of exchanges of views, as long-running arguments around contentious points. But a series of speeches, by Mackintosh in London and by Michel Prada, chairman of the trustees of the IFRS foundation, around the cities of eastern Asia, put things into context.

At the turn of the new year it will be a decade since the EU adopted IFRS. ‘Perhaps’, suggested Mackintosh, ‘we are moving from the build-out phase of global standards, to a period where the focus is on the maintenance of those standards and working with others to encourage their consistent implementation’. Certainly that is where the work of the future lies. The Financial Stability Board, as one of Prada’s speeches emphasised, summed up the global view in its consistent mantra of ‘the continuing relevance of a single set of high quality global accounting standards’.

And that is what continues to happen around the world. As Prada pointed out in Tokyo, support for global accounting standards there is part of the government’s growth strategy. The speed with which domestic Japanese companies are voluntarily transitioning to IFRS and the reasons they gave for doing so of comparability with global competitors, spreading the shareholder base, and management efficiency, are far from narrow domestic concerns. The same goes for China, as Prada made clear in Shanghai. The modernised Chinese accounting standards are close to those of IFRS and are being updated in step with the new standards produced by the IASB. And as Prada said: ‘It is often overlooked that Chinese companies representing more than 30% of the total domestic market capitalisation in China also report using full IFRS for the purpose of their dual listings in Hong Kong, while Hong Kong has itself been fully on board with IFRS since the beginning’. So China has modernised its accounting standards, and is a few modifications away from full IFRS, and Hong Kong, its international financial centre, has adopted IFRS, as Prada put it ‘in full and without modification’.

Onward to Seoul in Korea, one of the major beneficiaries of economic globalisation, and here Prada extolled the virtues of Korea having switched to IFRS. ‘As a result of that decision’, he said, ‘investors around the world are entirely familiar with the financial statements of Korean companies. Korean multinational conglomerates such as Hyundai, LG, POSCO, and Samsung are now able to use the same reporting framework across tens if not hundreds of international subsidiaries and joint ventures’.

The broader world is shifting. IFRS has become the overwhelming language of financial statements and investors’ choice around the world. As Prada said in Tokyo the use of IFRS in the US is far more advanced than many realise. ‘US investors are already prolific users of IFRS financial statements’, he said, ‘holding more than eight trillion dollars of foreign holdings, most of which are denominated in IFRS’. And, if that was not enough evidence of how IFRS has crept in, he pointed out that ‘the SEC oversees the IFRS-compliant financial statements of nearly 500 international companies listed in the US’.  It is the simple, and inevitable, effect of the demand-side of globalisation and international business being satisfied by the supply-side of IFRS.

So all eyes were on Washington in December when James Schnurr, the recently appointed Chief Accountant at the US regulatory body, the SEC, was due to speak at the annual AICPA gathering. Earlier in the year the SEC Chair, Mary Jo White, had put IFRS back into play. In May she had reiterated the SEC’s view from back in 2010 that ‘a single set of high-quality globally accepted accounting standards will benefit US investors and that this goal is consistent with our mission’. She had then said that it was a priority for the SEC to make a further statement on ‘this very important subject’.

Hence the keen anticipation of Schnurr’s views. What he said was that he was open-minded, but there were legal difficulties. While full adoption for domestic issuers appeared impractical he said that: ‘We understand that some domestic issuers may, now or in the near future, prepare IFRS-based financial information in addition to the U.S. GAAP based information that they use for purposes of SEC filings’. So a voluntary filing of IFRS information by those US companies who wished to could become a reality. But, as Ian Mackintosh pointed out later in the conference, there could be some doubt over how many companies would volunteer.

But as Schnurr concluded: ‘Based on the progress of our collective efforts, I am hopeful to be in a position in the coming months to commence discussions with the Chair and the Commissioners about the different alternatives for potential further incorporation of IFRS and the related issues and concerns of each alternative with the objective of reaching a recommendation on what, if any, further incorporation or use of IFRS by US registrants would be permitted or required’. It is slow, but encouraging, progress.