As we wrap-up 2010, and look forward into next year, I think 2011 is shaping up to be a very important year for accounting standards world wide. First, the initial wave of FASB / IASB convergence projects should be completed and compliance timelines announced. The expectation is for the new rules to become effective no earlier than 2013. These changes will impact customers reporting under both US GAAP and IFRS. Second, the SEC in the US is expected to provide an update on the IFRS Roadmap and adoption timeline. Many US customers are waiting for the SEC’s announcement before making final preparations for IFRS.
On November 29, the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), published their 3rd progress report on converging US GAAP and IFRS. Both FASB and IASB reaffirmed that the target completion date for the priority projects remains June 2011 or earlier. In general, the key discrepancies or gaps are being closed. However, companies should realize that small differences will still exist. So, a successful convergence will not mean that the FASB and IASB standards become identical, but that they are closer than before with major differences resolved. Furthermore, this implies that a second transition step to IFRS may still be required for US GAAP filers if the SEC mandates IFRS adoption for public companies, though this transition is expected to be easier than if the FASB / IASB convergence projects had not been successfully completed. For a summary of the FASB/IASB’s update, please see the Journal Of Accountancy.
On October 29, the SEC provided an update on their IFRS work plan. Though there were no major conclusions or announcements, it is clear that the SEC is diligently working on IFRS and is currently focusing on six major areas. In their update, they also raised logical concerns about the processes and organizations involved in setting IFRS standards. Though no exact dates are given, the SEC IFRS work plan updates will be made periodically, so expect another next Spring or Summer. For a summary of the SEC’s update please see the Journal Of Accountancy.
With so many important accounting updates expected in 2011, I think history will show that it was an important tipping point for accounting standards world wide. As you consider your New Year’s resolutions at your workplace, don’t forget to add one for accounting changes. Knowledge and advanced planning will be the best way to ensure success in 2011 as the accounting changes unfold. If you want some ideas for specific recommendations or action plans, please view the Fall Webinar Series and the IFRS Webinars and Recordings, both contain lots of excellent content from SAP and our partners.