A little rebellion now and then…is a medicine necessary
for the sound health of government.
Thomas Jefferson (1743 – 1826), Letter to James Madison, 1787
The spirit of resistance to government is so valuable on certain
occasions that I wish it to be always kept alive.
Thomas Jefferson (1743 – 1826)
Tim Reason, editorial director at CFO.com and no relation to either Thomas Jefferson or Marquis de Lafayette as far as I can tell, has twice asked if there is a resistance movement to IFRS coming to America. His first query was “Is There an IFRS Resistance Movement?“, The second was “Vive la Résistance (to IFRS)? “.
I’m here to announce there is! Vive la résistance! Sharpen your numbers. Get your ledgers in order. Stockpile debits and credits for throwing at the enemy. Men an women to the battlements. Rally ’round the flag. The war is about to begin.
Wait a second. What? There is no flag? There should be. I think this will work, check it out!
Yes, we are at war or revolution or resistance, call it what you may. Make no doubt about it, this is a major war. The SEC has proposed switching from American generally accepted accounting principles (GAAP) as the basis for corporate financial reports to International Financial Reporting Standards (IFRS).
And it’s one, two, three,
What are we fighting for?
Don’t ask me, I don’t give a damn,
Next stop is Vietnam I-FeRS;
And it’s five, six, seven,
Open up the pearly gates,
Well there ain’t no time to wonder why,
Whoopee! we’re all gonna die.
We all know that to the victor go the spoils, so what is at stake in this war? Trillions and trillions of dollars. Enough money to make the devastation caused by the sub-prime, banking and mortgage crises pale in comparison.
In the near future, I will present my argument about the how immense is the potential wealth transfer away from the US if the invading IFRS breach the mainland by becoming mandated for American companies. There are other arguments, and these will be analyzed as well. So will be the strengths and weaknesses of the mighty IFRS.
The clouds of war have been gathering for a couple of years. IFRS scouting units are about to land on US soil, as foreign companies that list in the US will be able to use IFRS instead of the current requirement to reconcile their results to GAAP. The forces of IFRS set sail for the US mainland on August 27, when the SEC formally proposed a road map for transitioning to GAAP from IFRS.
In the near future, the SEC will open a 60 day comment period on its road map. This is shaping up as a major battle. At stake are the financial beaches of mainland USA There will be other battles, to be sure, but the chances of winning them will be severely diminished if IFRS is allowed to invade unopposed, It would be a shame not to even contest it.
Conceivably, a victory by the patriotic resistance in this battle would mean that the IFRS issue in the US would be either rejected or delayed for years. I don’t think rejection of IFRS is going to occur as a result of this battle. Deferring the transition for large test corporations is a possibility, and what we should be fighting for.
When will this battle begin? Soon and very soon, but the exact date is any one’s guess. In late August when the SEC announced the road map, many thought that the 60 day comment period would start quickly. It hasn’t. But then, the SEC has had other issues on its plate. The big bank bailout is incredibly significant, to be sure. But so is presidential candidate John McCain’s shot that SEC chairman Christopher Cox should be fired. What a distraction!
I hope that all of you will prepare with me for the upcoming battle. Visit the Summa frequently for all the supplies you need as you get ready to comment to the IFRS about its road map.
Over and out – - David Albrecht