In announcing the Securities and Exchange Commission’s roadmap for a U.S. conversion to IFRS on Wednesday, chairman Christopher Cox described the proposal as a “cautious and careful plan.”

To date, no one has officially commented on the proposal — indeed, the SEC had yet to formally post it as Washington wound down for the Labor Day weekend. But a few observers interviewed by CFO.com echoed the chairman’s cautious tone — and added their own concerns.

Robert Pozen, chairman of MFS, said he personally supports the idea of rolling out IFRS by 2016, but also said he believed the idea of some large companies starting as early as next year was “problematic.”

Pozen served as chairman of the SEC’s Advisory Committee to Improve Financial Reporting, a year-long panel that submitted its final report on August 1, just weeks before the SEC’s IFRS announcement. CIFR focused on ways the SEC and the Financial Accounting Standards Board could improve financial reporting without resorting to changes of law. The committee repeatedly acknowledged in its interim and final reports that the move to convert to IFRS was gathering speed and might affect the committee’s own recommendations.

Stressing that he was voicing his own opinion, and not speaking for the CIFR committee, Pozen said “I think it is too early. The SEC should allow this to happen, but later than 2009–maybe 2012 or 2013.” He added that “There are a lot of issues about training auditors and analysts” that have yet to be addressed.

Pozen also noted that the current proposal could result in a seven-year time span in which different U.S. companies might be following different accounting rules. “Do you really want to have two systems for that long a time?” he asked.

“I think it would be useful for the first year or two to have [U.S. companies perform] a reconciliation between IFRS and GAAP” said Pozen. “While that won’t be fun for companies, the point of a beta [test] is to get people to understand the differences.”

To William Lougheed, managing director of The LSC Group, a financial consulting firm in Tampa, Florida, some of those differences seem insurmountable, starting with the fundamental difference between the rules-heavy U.S. system and the more general principles offered by IFRS. Lougheed, a CPA, says some of the very issues that Pozen’s committee identified as problems — such as FASB’s tendency to issue overly detailed accounting guidance — make the adoption of IFRS a “ticking time-bomb.”

Lougheed, whose firm helps GAAP-reporting companies with complex accounting and valuation issues, thinks the United States isn’t ready for the so-called principles based standards of IFRS.

“Mr. Pozen calls the FASB unrestrained” in issuing implementation guidance, notes Lougheed, citing the hundreds of pages that were generated over FAS 133, the accounting standard for derivatives. “But if that’s what’s wrong with U.S. GAAP, then there’s something wrong with practitioners in this country. We didn’t have that shoved down our throats. We asked for it.”

Lougheed believes it will be nearly impossible for American companies and accountants to shake that habit. “We don’t care how long it is or how thick it is, we expect FASB, the [Emerging Issues Task Force], and the SEC to come to our aid with interpretive guidance.”

Indeed, the CIFR committee recommended that the SEC control its own penchant for releasing informal guidance, noting that “the SEC staff should refrain from issuing broadly applicable interpretive implementation guidance that would change U.S. GAAP.” CIFR also urged the SEC to emphasize that its comment letters apply only to the company to which they are addressed.

But Lougheed thinks the SEC will have a hard time eschewing guidance. Indeed, he says, when the Sarbanes-Oxley Act mandated that the SEC investigate principles-based standards, the SEC’s 2003 staff report redefined principles-based standards as ‘objective-oriented standards.’ “The first thing they did when they looked at principles-based standards was to develop an interpretation of it,” he laughs. “Do I think the SEC will [resist] developing interpretations of IFRS? Nope.”

And while almost all his work involves U.S. GAAP, Lougheed said he got a shock not long ago when trying to explain a FAS 133 issue to his client’s auditor, a U.K.-based partner of a Big Four firm. “The audit partner was having a really difficult time understanding,” as Lougheed attempted to explain the U.S. accounting rule with analogies from equivalent IFRS standards. In fact, says Lougheed, the root of their misunderstanding wasn’t U.S. GAAP, but the fact that the Big Four partner was familiar with the U.K. version of IFRS, which differs subtly from IFRS as issued by the International Accounting Standards Board.

“I had an epiphany,” says Lougheed, “I learned for the first time that IFRS isn’t necessarily IFRS country-to-country. There are variants.”

Variations within IFRS are, in fact, one of the issues that the SEC says need to be addressed, and foreign-based firms listed in the U.S. can only file in IFRS if they use IASB-issued standards, not local variants. That said, if the SEC can’t curb its own enthusiasm for issuing guidance, U.S. conversion to IFRS may simply add one more variation.

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