Regulation

Best of 2008: IFRS

The SEC's proposed timeline confirmed regulators are serious about pursuing global standards but shaky on the details. CFOs will have to figure out...
CFO.com StaffDecember 30, 2008

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The Securities and Exchange Commission’s timeline, proposed in late August, presented long-awaited plans for eventually requiring all U.S. publicly traded companies to change their accounting language. But it raised more questions than answers.

Will the plan actually take effect? Or will “international financial reporting standards” become another globalization joke, like worldwide adoption of the metric system? How much money would the transition to IFRS really cost? How and when should CFOs talk to their HR and IT managers about the repercussions this change could have on other departments? How can companies ensure proper controls when running two sets of accounting standards simultaneously (which may be a requirement for the foreseeable future)? What differences between U.S. GAAP and IFRS will cause the greatest headaches?

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CFO.com delved into these topics all year long, giving finance executives the framework for the many issues that they should at least be considering, as regulators push for the demise of U.S. GAAP and the adoption of what many consider a more principles-based system.

This is not to say that finance execs new to the global rules must run out right now for a copy of IFRS for Dummies. The SEC is giving most companies eight years to adopt the rules, and has given itself three years to cancel the entire project. After all, chairman Christopher Cox often has called the IFRS plan “careful and cautious,” and many critics of the timeline have doubted whether Cox’s successor will make the project such a high priority. Critics also caution that the SEC’s timeline is too ambitious, and that it outpaces other agencies’ ability to keep up. Indeed, GAAP is inherent in many state rules, tax policies, and companies’ own contracts with employees and lenders. Check this space to see whether GAAP prevails in the U.S., even as most countries around the world are requiring their companies to use IFRS.

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