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ACCA report on "IFRS in the U.S."

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Nov 16, 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 U.S.-based investors (professional investment managers, asset managers, and fund managers), which asked whether they believe the SEC will eventually adopt IFRSs. The results indicate that 57 percent of investors surveyed expect the adoption of IFRSs in the United States 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."

IASB 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 that investors have noted in regards to the adoption of IFRSs:

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

Further, the report identified the main concerns that U.S. investors have toward a move to IFRSs. According to the report, these concerns are:

  • Will IFRS adoption lead to reduced complexity for U.S. corporates?
  • Is IFRS adoption going to lead to a dangerous loss of U.S. influence over the standard-setting process?
  • Are U.S. 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 U.S. corporates with that of other companies overseas?
  • Are U.S. 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 the ACCA's Web site).

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