The Commission approved a 71-page Commission Statement (PDF 349k) that provides an overview of the Commission's IFRS activities, summarises some of the public feedback on the proposed IFRS roadmap, and outlines an approach going forward. The Commission reiterated its support for a single set of high quality global accounting standards and said that IFRSs are the set of standards best positioned to be global standards. The Commission Statement directs the SEC staff to carry out a Work Plan prior to an SEC decision on whether to require US issuers to transition to IFRSs. According to the Commission Statement, that decision will be made in 2011. The execution of the Work Plan, combined with the completion of the convergence efforts, would position the Commission to make an informed decision on a mandate. The Commission Statement withdraws the early use option that was in the proposed roadmap. However, it was indicated that early use is still a viable option if the SEC decides to require the use of IFRSs. The Commission Statement does not provide any details of potential transition dates or approaches, but the SEC staff stated that 2015 or 2016 seemed reasonable based on comments received on the proposed roadmap (a transition would require four to five years).
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The key areas of concern to be addressed by the SEC staff as part of the work plan include:
- Sufficient development and application of IFRSs globally – comprehensiveness of IFRSs, auditability and enforceability of IFRSs, and comparability across jurisdictions
- Independence of standard-setting – oversight of the IASCF, composition of Trustees and IASB, funding, and the standard-setting process
- Transition issues:
- Investor understanding and education – education of investors
- Impact on regulatory environment – industry regulation, federal and state taxes, and audit regulation
- Impact on issuers – accounting systems, controls and procedures, contractual arrangements, and corporate governance
- Human capital readiness – education and training of various constituency groups
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In her Opening Remarks (PDF 30k) at the Commission meeting, SEC Chairman Mary L Schapiro summarised the SEC's approach as follows:
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Today's Commission statement reaffirms our support for a single globally accepted standard, describes the issues that need to be further examined and analyzed, and lays out the events that must occur between now and 2011. Specifically, the convergence projects currently underway between the FASB and the International Accounting Standards Board, must first be successfully completed. And our staff must gather information to aid the Commission as it evaluates the impact that the use of IFRS by US companies would have on our securities market. To this end, we have asked the staff to develop and execute a work plan, which the staff will discuss in more depth in a moment.
In 2011, upon conclusion of the fact-gathering and analysis set forth in the work plan – and assuming completion of the convergence projects – the Commission will then be in a position to determine whether to incorporate IFRS into the financial reporting system for U.S. public companies. Until that time, we will expect staff to provide periodic written public reports to the Commission on the progress of its efforts.
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The Commission expressed support for the FASB having a continuing role in global standard-setting activities and asked the SEC staff to further explore this possibility as part of its Work Plan. The SEC staff will be providing regular progress reports in open meetings and indicated the first one will be provided no later than October 2010.