"The commission directed agency staff earlier this year to execute the Work Plan to provide the information needed to evaluate the implications of incorporating International Financial Reporting Standards (IFRS) into the financial reporting system for U.S. issuers. The Commission indicated that following successful completion of the Work Plan and the convergence projects of the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB), it will be in a position in 2011 to determine whether to incorporate IFRS into the U.S. financial reporting system."...

The workplan Plan addresses six key areas:

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

As to timing, the press release adds:

"The SEC staff expects to continue to report periodically on the status of the Work Plan in 2011."

Tweedie Says Single Set of Stanards, Not Just Convergence, Necessary for Level Playing Field
Speaking at Deloitte's third annual IFRS Summit, as noted in this Deloitte press release, IASB Chairman Sir David Tweedie commented that international convergence in accounting standards will not provide the level playing field sought by the G-20 Leaders as part of their blueprint for financial reform. Tweedie added that only a single set of high-quality standards, applied globally will achieve this objective, and that is why U.S. participation in the development of global standards is so important.

According to Deloitte's press release, FASB Acting Chairman Leslie Seidman, also at the briefing, used the term "common set of standards" in her remarks, as noted below:

FASB Acting Chairman Leslie F. Seidman stated that the FASB has long believed that a common set of global, high-quality accounting standards will increase consistency and transparency in financial reporting. Seidman added that the entire board is committed to working with the IASB to develop the best accounting standards for a global market. She further noted that our constituents -- investors who provide capital, business owners, preparers and auditors of financial statements, and regulators -- would all benefit from a converged set of global accounting standards.

IFRS Readiness, Timing, Cost Of Adoption, Considerations For Issuers
Companies have begun doing their homework on IFRS, and are at various stages of IFRS readiness, depending on how beneficial the company views the potential adoption of IFRS to them, and depending on their view of how likely it is that the SEC will decide to permit or require IFRS, and their estimated timing of the effective date of that decision.

Deloitte's press release notes:

"Despite regulatory uncertainty regarding IFRS in the U.S., many companies remain focused on key IFRS trends and their own IFRS planning activities."

Deloitte is sponsoring an IFRS Convergence Update and Planning Approaches on November 17 in New York (following FEI's Current Financial Reporting Issues (CFRI) conference and at the same hotel as CFRI (Marriott Marquis Time Square); separate registration and payment is required for CFRI and the IFRS conference.) See the agenda, register here. 

KPMG Survey Results Released
Separately, survey results published on Oct. 28 by KPMG LLP, resulting from a joint survey of more than 900 executives who were members of Financial Executives International or KPMG's IFRS Institute, found that:

• 75 percent of the respondents say their organizations would wait until the U.S. Securities and Exchange Commission requires IFRS as the standard for filing financial reports before they move away from U.S. generally accepted accounting principles (U.S. GAAP).
• Nearly half of the survey respondents ... anticipate an SEC decision on IFRS in 2011 ... only 15 percent ... sa[y] they do not expect a vote next year on whether to incorporate IFRS into the financial reporting system for U.S. issuers.
• 94 percent of the respondents say their organizations could ... adop[t] IFRS by 2016 if a decision is made [by the SEC] in 2011.

FEI President and CEO Marie N. Hollein emphasized the need for adequate time to be provided for any IFRS mandate. As noted in KPMG's press release:

"Marie N. Hollein, FEI's president and CEO, says the findings indicate a readiness by some companies to achieve compliance, but adequate time is needed to make the switch. Additionally, Hollein notes that 65 percent cited cost of implementation as a concern, and a third of the executives say their companies have not yet assessed how IFRS will affect their companies, and would await a rule proposal or even the final rule from the SEC before they look at how IFRS will change accounting and other areas throughout their organizations.

"Requiring adoption of the new converged US-GAAP standards and later IFRS could create a significant burden on companies, and FEI would hope that the regulatory process will provide enough time for companies to understand the impact of the new standards and have the opportunity to respond to any rule proposals offered by the SEC," Hollein said. "It is important that implementation be done right the first time."

Updated Oct. 30, 2010 by FEI staff. This summary does not represent FEI opinion unless specifically noted above.