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SEC proposes a 'roadmap' to IFRSs for domestic US registrants

28 Aug 2008

On 27 August 2008, the US Securities and Exchange Commission voted to publish for public comment a proposed 'roadmap' that could lead to the use of International Financial Reporting Standards (IFRSs) by US issuers beginning in 2014. Currently, US issuers must use US GAAP, though foreign registrants (of which there are around 1,100 from 52 jurisdictions) may elect to use IFRSs.

The proposal suggests mandatory adoption by US registrants could be phased in from 2014 to 2016 depending on company size:
  • Large accelerated filers in 2014
  • Accelerated filers in 2015
  • Non-accelerated filers in 2016.
The proposal also would permit voluntary early adoption for a limited group of large US registrants (based on industry and size, roughly 110 companies eligible) for periods ending after 15 December 2009 (filings in 2010). However, mandatory IFRS adoption starting in 2014 would not be automatic. In 2011, the Commission would evaluate the progress of IFRSs against certain defined milestones and make a decision on whether to go ahead with adoption starting in 2014, later, or not at all. Here is the SEC Press Release (PDF 30k). The SEC has not yet posted the full text of the proposal on its website. There will be a 60-day comment period that begins when the roadmap proposal is published in the Federal Register. Financial Executives International has issued a Press Release (PDF 37k) stating that "FEI supports the SEC's decision today to propose a Roadmap for US issuers for filings of financial statements prepared in accordance with IFRS." [This story has been expanded from our original posting.]

 

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Technology implications of IFRS adoption for US companies

27 Aug 2008

Deloitte Consulting LLP (United States) has published a booklet that explores the technology implications associated with IFRS conversion by US companies.

It discusses:
  • Evaluating the potential technology impact
  • How companies can prepare technology and systems changes related to IFRS adoption
  • Major differences between US Generally Accepted Accounting Principles (GAAP) and IFRS differences and what it means for systems
  • Key IFRS discoveries from some companies around the globe
Click to download Technology Implications of IFRS Adoption for US Companies (PDF 276k). You will find Links to Many Other IFRS Publications here.

 

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Deloitte will sponsor IFRS 2008/09 conference

27 Aug 2008

Deloitte will be the main sponsor of IFRS 2008/9 Strategic Direction and Practical Interpretation, a conference that will be held in London on Wednesday 12 November 2008. Speakers at this annual conference include IASB Chairman Sir David Tweedie (opening keynote address and open dialogue) and Deloitte partners Ken Wild and Veronica Poole.

Topics that will be covered include an analyst's view of financial reporting priorities; FSF recommendations on risk disclosures, valuations, and off balance sheet vehicles; the professional practice view of IFRSs; valuations in light of the credit crunch; the year ahead for IFRSs; implications of IFRSs for directors and auditors; complexity of standards; and IFRSs and regulation.

 

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We comment on an IAASB proposal

26 Aug 2008

Deloitte has recently submitted a letter of comment to the International Auditing and Assurance Standards Board (IAASB) on a proposed ISAE 3402 Assurance Reports on Controls at a Third Party Service Organization.

Click to view ISAE 3402 Assurance Reports on Controls at a Third Party Service Organization (PDF 42k). You will find all of our past comments to the IAASB Here.

 

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JSE requires auditors to have 800 hours IFRS training

26 Aug 2008

The Johannesburg Stock Exchange has amended its listing requirements to require all independent auditors of listed companies to have experienced IFRS specialists and to register with the JSE.

Specifically, the new JSE rules:
  • establish a JSE Registry for Auditors and their IFRS advisors
  • require any audit firm that wishes to audit listed companies to be registered with the JSE
  • require all audit firms to have at least three individual auditors within the firm registered with the JSE
  • require all audit firms to have at least one IFRS advisor, either internal or external to the firm, registered with the JSE. The role of the IFRS advisor includes providing 'technical IFRS assistance and advice in support of the assurance opinion'.
  • require IFRS advisors to have spent a specified number of hours on 'performing practical and interpretive IFRS consulting over the past 12 months in order to have a comprehensive working knowledge of IFRS'.
    • If the IFRS advisor is a single individual, 800 hours of IFRS experience in the past 12 months is required.
    • If the IFRS advisor is one of two individuals who work as part of an IFRS advisory group, each of those individuals must have spent at least 500 hours on IFRS work in the past year.
The JSE requires listed companies to follow IFRSs and requires auditors to follow International Standards on Auditing. Click for JSE Listing Requirements that Contain the New Rules (PDF 169k). Here is a link to our South Africa Page.

 

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SEC will consider IFRS Roadmap for domestic US registrants

25 Aug 2008

At its open meeting on Wednesday 27 August 2008, the US Securities and Exchange Commission will consider whether to invite public comment on a plan ('Roadmap') by which the United States might allow domestic US registrants to use International Financial Reporting Standards (IFRSs) in their filings with the Commission instead of US Generally Accepted Accounting Principles (GAAP).

Earlier this year, the SEC already began allowing foreign registrants to use IFRSs without the need to prepare a reconciliation to US GAAP data. Here is the agenda item as described in the SEC's Meeting Notice:

The Commission will consider whether to propose a Roadmap for the potential use by US issuers for purposes of their filings with the Commission of financial statements prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board. As part of the Roadmap, the Commission will also consider whether to propose amendments to various rules and forms that would permit early use of IFRS by a limited number of US issuers.

 

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Agenda for 4-5 September 2008 IFRIC meeting

24 Aug 2008

The International Financial Reporting Interpretations Committee (IFRIC) will meet at the IASB's offices in London on Thursday and Friday 4-5 September 2008. The meeting is open to the public and will be webcast.

The tentative agenda is shown below.

4-5 September 2008, London

Thursday 4 September 2008 (10:00-17:30)

Friday 5 September 2008 (9:00-Noon)

  • Staff Recommendations for Tentative Agenda Decision
    • Customer-related intangible assets
    • Restricted securities
    • Application to prepaid employer's contribution reserve
  • Regulatory Assets and Liabilities
  • Administrative Session
    • IFRIC work in progress

 

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PCAOB is ruled constitutional in a 2-1 court decision

23 Aug 2008

On 22 August 2008, the United States Court of Appeals for the District of Columbia Circuit released its decision in the case Free Enterprise Fund, et. al. v. Public Company Accounting Oversight Board (PCAOB).

The Free Enterprise Fund had challenged the legality of the PCAOB under the US Constitution. Judge Rogers wrote the opinion for the court, with Judge Kavanaugh dissenting. Here is an excerpt from the opinion:

We hold, first, that the Act does not encroach upon the Appointment power because, in view of the [Securities and Exchange] Commission's comprehensive control of the [Public Company Accounting Oversight] Board, Board members are subject to direction and supervision of the Commission and thus are inferior officers not required to be appointed by the President. Second, we hold that the for-cause limitations on the Commission's power to remove Board members and the President's power to remove Commissioners do not strip the President of sufficient power to influence the Board and thus do not contravene separation of powers, as that principle embraces independent agencies like the Commission and their exercise of broad authority over their subordinates. Accordingly, we affirm the grant of summary judgment to the Board and the United States.
Click to download the Full Text of the Court Decision (PDF 252k). The decision is 92 pages in length, of which 57 pages is Judge Kavanaugh's dissenting opinion. In Judge Kavanaugh's view, the 'PCAOB's structure unconstitutionally restricts the President's appointment and removal powers'. Click for:

 

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Webcast on US GAAP and IFRS convergence

22 Aug 2008

Deloitte (United States) will present a webcast on US GAAP and IFRS Convergence: Bridging the Divide at 2:00 PM EDT (18:00 GMT) on 3 September 2008. Host for the webcast is Ron Sonenthal, Partner, Deloitte Tax LLP.

The webcast will focus on the implications of adoption of IFRSs in the United States on companies' compensation and benefits programs. Topics that will be covered include:
  • Analysing possible financial statement effects of IFRS with regard to compensation and benefits programs, including executive compensation, health and welfare, and retirement programs.
  • Evaluating the potential impact of IFRS accounting on the operation of your rewards programs, especially those driven by corporate financial performance.
  • Assessing IT and process changes, including information gathering, reporting, and internal controls.

 

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SEC unveils 'IDEA' replacement of EDGAR system

22 Aug 2008

The US Securities and Exchange Commission Chairman Christopher Cox has unveiled the successor to the agency's 1980s-era EDGAR database, which will give investors far faster and easier access to key financial information about public companies and mutual funds.

Based on a completely new architecture being built from the ground up, it will at first supplement and then eventually replace the EDGAR system. The decision to replace EDGAR marks the SEC's transition from collecting forms and documents to making the information itself freely available to investors to give them better and more up-to-date financial disclosure in a form they can readily use. The new system is called IDEA, short for Interactive Data Electronic Applications. IDEA will enable investors will be able to instantly collate information from thousands of companies and forms, and create reports and analysis on the fly, in any way they choose.

On 14 May 2008, the US Securities and Exchange Commission proposed that all registrants be required to file their data with the SEC in XBRL (interactive data) format. XBRL reporting would be required for registrants using either US GAAP or IFRSs. The transition would take three years starting in 2008. There's more information in our News Story of 16 May 2008. A few days later, the Commission proposed that more than 8,000 mutual funds trading in the US would also be required to file XBRL date (see our News Story of 26 May 2008).
The SEC's On-Line News Release includes links to a video demonstration of IDEA.

 

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