Plea for timetable on accounting changes

Leading US companies could use the same accounting rules as international rivals in about five years, says the senior US accounting rulemaker.

His assertion came as US businesses wait for the Securities and Exchanges Commission, the US markets watchdog, to produce a roadmap for managing the shift from domestic accounting rules to International Financial Reporting Standards (IFRS).

Five years is a relatively tight timetable given the scale of retraining needed and the struggles companies will face in changing their systems.

But Robert Herz, chairman of the US Financial Accounting Standards Board, said: “You don’t want the date to be too far out so that nobody pays attention, on the other hand, you want it far enough so that what needs to get done can get done.

“Most people think that the SEC needs to set some kind of date . . . five or so years out at least for the larger public companies . . . and that would get the system moving,” he told the Financial Times.

The SEC is working on a roadmap that would set targets for US companies but has not given a specific date laying out its plans.

It is now running close to the last date that it can be expected to issue a proposal before Washington effectively shuts down before the US presidential election.

Christopher Cox, chairman of the SEC, said last week that the shift to IFRS was “a vitally important topic the Commission is scheduled to take up in the form of a proposed rulemaking later this summer.”

The SEC voted late last year to allow foreign companies to file international financial reporting standards without reconciling their accounts to US generally accepted accounting principles, or GAAP.

But US acceptance of IFRS – used or being adopted by more than 100 countries including India, China and members of the European Union – would be no small achievement, making it all but certain that a single set of accounting standards would be followed globally.

Mr Herz said: “We are going to have to make some institutional and cultural changes in order to be good global citizens in an international system.”

EU countries managed the change in three years, from 2002, when it was announced, to 2005, when the first financial statements in IFRS were required.

On Wednesday US, European and Japanese regulators backed the creation of an international monitoring group to oversee development of global accounting standards.

http://www.ft.com/cms/s/0/3ec5d51e-3d6e-11dd-bbb5-0000779fd2ac.html

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Plea for timetable on accounting changes