Switch to Ifrs
Introduction
Public accountants render accounting services (tax, assurance, consulting, etc.) to publicly traded companies. The “Big 4” are the four largest accounting firms: KPMG, Deloitte, Ernst & Young, and Pricewaterhouse Coopers. While we are a presence in the industry, we are not typical of other firms. Our place has been to perform affordable assurance and tax services for small public companies.
Current Industry Trend
In 2008 the Security and Exchange Commission issued a notice that all companies must switch from the the U.S.standards, Generally Accepted Accounting Principles, to International Financial Reporting Standards. The “roadmap” released by the SEC set a 2014 deadline for this conversion, assuming certain milestones were met by 2011. There are major differences between GAAP and IFRS that are causing delay in the switch. (Attachment: Current Major Differences Between IFRS and US GAAP). It is also a costly procedure.
Firms, including ours, are facing not meeting the 2011 milestones. The following are statistics gathered by Pricewaterhouse Coopers on the conversion:
Over 1/2 public companies are less than 60% complete
1/3 of the 146 surveyed expect to spend $100,000 to $500,000
Larger firms are further along than small/midsized firms
Notes in the financial statements expand 30-50% (meaning more labor)
(Galt)
The concern is that while firms can push to meet the deadline, most will still not make it. Those who can make the deadline will do it at the potential sacrifice of quality. (Marcy, Burkholder, Lugo)
Luckily, the SEC is delaying its decision on a deadline, and now it’s unsure if we will have to switch at all.
Bill Heard,