The global march toward international financial reporting standards (IFRS) continues apace: by 2011, India, Canada, Korea, and Brazil will have joined the more than 80 countries that require IFRS reporting for all domestic listed companies.
Under the SEC's proposed road map, the United States will follow a more leisurely timeline. Some issuers would have the option to apply IFRS for fiscal years beginning on or after December 15, 2009. Large accelerated filers would be required to file IFRS financial statements for fiscal years ending on or after December 15, 2014, and smaller accelerated filers and non-accelerated filers would be phased in over the next couple of years.
The chances are good that the SEC under the Obama administration will touch the brakes to the transition. But IFRS isn't going away. It's no longer a question of whether it's going to happen, but when it's going to happen, as D.J. Gannon, partner and leader of Deloitte's IFRS solution center, told Business Finance recently.
U.S. companies are in no hurry to gear up for global accounting standards, though, according to a new Business Finance webcast survey of more than 150 finance pros. When asked whether their organization has formulated an IFRS transition plan or assembled a transition team, only 37.5 percent said yes.
The result jibes with an October survey from Protiviti in which nearly one-half of respondents said that their company has made no preparations to date to adopt IFRS, as Laurie Brannen reported here.
Switching to IFRS involves much more than tackling technical accounting issues; the changeover, when it comes, will have far-reaching effects on companies' financial controls, data collection processes, and software systems. You might expect that companies would be looking to one of their most powerful financial software tools -- corporate performance management (CPM) systems -- for a leg up on the transition. But only 18 percent of organizations currently have a CPM solution (an integrated system, as opposed to spreadsheets) in place to address their IFRS requirements, according to the Business Finance poll.
How long can U.S. companies afford to procrastinate on IFRS? Not long. Businesses with operations in multiple countries should be investigating the possible efficiencies and cost savings from moving to a single accounting language. But the clock is ticking for other organizations, too; those that approach the changeover as an opportunity to revamp their reporting infrastructure, rather than just one more set of regulatory mandates, will be best positioned to realize the promise of increased transparency and comparability of financial results that IFRS holds out.