That sounds like sweet music to my ears! Of course, the SEC has yet to suggest a date by which U.S. companies have to adopt IFRS rules, and the thought of such a massive switch is the current topic of discussion at some of the hard partying accounting functions in the country (think fraternity keg party with calculators and sheep).
IFRS adoption has been the hot topic at a recent forum held by the FASB. “If we set a date for adopting [IFRS], we need a minimum of a year, if not two years, of no new accounting systems,” said FASB member George Batavick. “Companies need a break.” He also said there should be “at least a one-year quiet period” during which no interpretive guidance would be issued.
Right now the adoption of IFRS is still more of a pipe dream than a reality, and it is not certain whether most corporate ERP systems have that capability, or even how much effort would be required to develop it.
Batavick, who said he is a “strong believer in moratoriums before and after” a future switch to IFRS, discussed this in response to a question from the audience at a mid-year update webcast. He also said there should be “at least a one-year quiet period.”
Of course to make matters a little more complex, the IASB is in the middle of a moratorium that expires in January 2009 that is intended “to provide a period of relative stability.” Though the IASB continues to work on and even issue new standards during this period, the effective dates are postponed until 2009. The current moratorium was announced in 2006 and is aimed at “easing accounting compliance for European companies that converted to IFRS in 2005.” The European companies had three years to convert from their local generally accepted accounting principles to IFRS, the phase-in period coincided with IASB efforts to finalize many of its rules, which created some confusion and effectively shortened the actual amount of time many European companies had to prepare for the change.
Recently, there has also been a strong push for IASB and FASB to accelerate several large projects that are part of the accounting standards convergence agreement between the two boards. These include lease accounting, financial statement presentation, and revenue recognition, and have been dramatically slimmed down in hopes of completing them by 2011. By wiping off large projects like these from the agenda, the rulemakers may effectively produce another post-adoption moratorium for countries that have set 2011 as their adoption date, thus providing them with a period of relative stability, which include Canada, Korea, Japan, and India.
The United States is most likely to follow in 2013, a post-2009 moratorium could be good news for U.S. companies. Really sucks for others around the world, because they would be the first to roll out IFRS during a moratorium rather than receiving one after the fact.
Either way, I’m not looking forward to all these massive changes, and I expect to see tons of money making schemes by crooks claiming to know the fast-track to implementing this system and committing fraud to millions of people trying to get this all done quickly. One proven way to get this done is to start early, get your people trained, and be prepared when the switch takes place. Plus remember my favorite phrase, “don’t piss off your accountant!” They are the ones who hold the family jewels together for the company…