In December, 2011, Leslie Seidman (FASB), and Hans Hoogervorst (IASB) declared convergence between U.S. GAAP and IFRS to be at an impasse. Chief Accountant James Kroeker said the SEC would need further study on the issue. Since then, much has been written about the prospects for the U.S. adopting IFRS at this time.
Here is my thinking on the issue, but I really don’t know why I’m bothering. I’ve played this prediction game before, and have failed miserably. I don’t have inside contacts at the SEC, so there is no flow of inside information.
I doubt the SEC will make any decisions on IFRS until after the first Tuesday in November (election day) and the results have been certified.
The rationale is fairly simple. IFRS is unpopular with many American rank and file accountants, small and medium business executives, and smaller investors. Because observers expect a close presidential election between Democratic incumbent Barak Obama and the Republican challenger, President Obama will not risk alienating voters by adopting IFRS. There will be time for that afterward if Obama wins the election. If he doesn’t, then IFRS will wait for the next president.
Debit and credit – - David Albrecht
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We need more coffin nails in IFRS. It eviscerates so much good guidance in GAAP.
1. 20,000 pages of industry-specific guidance in GAAP disappear in IFRS.
2. IFRS leaves too much judgment to CPA auditors, such that one auditor’s opinion is a good as any other’s.
3. We still don’t know what “international” means in IFRS. There are 180 countries in the world, and no single non-US group exists to represent them all. So the accounting standards of the United Kingdom, Uganda, China, and Peru all have the same weight? Or what?
4. IFRS is not run by an American body that is accountable to the interests of American investors, companies, and other groups.
May I suggest that if we all work hard at it, IFRS will be totally dead by the November elections.
Then we can work on the SEC to reverse its ill-inspired policy of allowing foreign-based companies to use IFRS on securities traded on U. S. stock exchanges. They should provide a GAAP version of their statements so that we have good comparability.