CFOs See Significant Opportunity in Conversion from GAAP to IFRS
Although the possible future conversion from Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) is expected to be an expensive and complex undertaking for U.S.-listed companies, a recent study found that many U.S. executives also see a significant opportunity to transform a number of major business functions.
The study surveyed more than 200 chief financial officers and other executives at U.S. companies with more than $1 billion in revenues. In addition to greater risk management with regard to financial reporting and transparency, a majority of respondents felt that the following corporate functions would realize greater operational efficiencies as a result of the coming conversion:
- Finance
- Information Technology
- Business Operations
- External Stakeholder Relations
- Customer Relations
- Human Resources
On August 27, 2008, the Securities and Exchange Commission (SEC) published its “Road Map to IFRS (International Financial Reporting Standards).” The SEC’s road map is a proposal of how to transition America’s public reporting companies to IFRS by 2014 for large accelerated filers, 2015 for accelerated filers, and 2016 for small reporting companies and other public filers. The SEC is seeking comments from the public and will most likely vote on the matter in 2011, but newly appointed SEC Chair Mary Shapiro has stated publicly that she “will not be bound by the existing road map that’s out for public comment.”
As the wave of convergence continues, public and private businesses need to prepare now to ensure that they do not get swept away when the time comes to implement the new international accounting standards. Business owners can continue to monitor the ongoing convergence project at www.ifrs.com.
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