Deloitte responds to the SEC staff's progress report on its work plan for global accounting standards

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01 Nov 2010

On 29 October 2010, the U.S.

Securities and Exchange Commission (SEC) staff published their first periodic progress report on the SEC's previously issued work plan. The work plan is being used by the SEC staff to gather information that will aid the SEC in evaluating whether, when and how IFRS should be incorporated into the U.S. financial reporting system. The SEC indicated that it will make a decision in 2011 after completion of the work plan and the convergence projects of the IASB and FASB.

The Work Plan addresses six key areas:

  • Sufficient development and application of IFRS for the U.S. domestic reporting system.
  • The independence of standard setting for the benefit of investors.
  • Investor understanding and education regarding IFRS.
  • Examination of the U.S. regulatory environment that would be affected by a change in accounting standards.
  • The impact on issuers both large and small, including changes to accounting systems, changes to contractual arrangements, corporate governance considerations, and litigation contingencies.
  • Human capital readiness.

The progress report describes the steps the SEC staff has taken thus far as well as what steps it will take in the future to gather the necessary information. For example, significant outreach activities have been performed in order for the staff to better understand the potential challenges of transitioning to IFRS. The progress report includes the staff's understanding of the different approaches used by various jurisdictions around the world in incorporating IFRS into their financial reporting systems and how those jurisdictions currently utilise their national standard setter. Also, the staff continues to evaluate the funding arrangement of the IFRS Foundation as well as the IASB's standard setting process.

"The progress report demonstrates the SEC's continued commitment to achieving a single set of high-quality, global accounting standards" said Joel Osnoss, Global Managing Director – IFRS Clients and Markets. Osnoss further added that "continued progress on the work plan will help ensure that the SEC is well-positioned to make a decision in 2011 about the use of IFRS in the U.S."

Additional progress reports on the work plan are expected during 2011.

"The SEC's decision about the use of IFRS in the U.S. has become increasingly important as more countries around the world adopt IFRS" said Veronica Poole, Global Managing Director – IFRS Technical. She added that "the recent financial crisis revealed the true interdependent nature of the global capital markets making the need for a single set of global accounting standards absolutely critical."

For more information on the SEC progress report, see Heads Up One Step Closer to IFRSs? - SEC Issues First Progress Report on Consideration of Incorporating IFRSs Into U.S. System (PDF 196kb), published by Deloitte (United States).

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