SEC Steps Towards Convergence, Demand for IFRS Expertise to Grow
The SEC has eliminated a requirement that foreign companies with U.S. stock market listings to reconcile their financial results with U.S. GAAP. The unanimous vote immediately affects roughly 1,100 companies with U.S. listings, along with any companies planning U.S. IPOs. The move appears to be a step towards convergence of global accounting standards. Hence, the pressure to adopt International Financial Reporting Standards (IFRS) continues to mount…along with demand for IFRS expertise.
The SEC’s decision is an attempt to simplify companies financial statements for investors. The SEC also hopes that it will attract more companies to list on U.S. exchanges by reducing compliance costs. SEC Commissioner, Kathleen Casey, said before the vote that “only by taking this step will we be able to make progress toward” the goal of a single set of high-quality accounting standards, according to BusinessWeek.
Currently, SEC data indicates that almost 100 countries currently require or allow the use of IFRS by public companies. Switching to IFRS significantly reduces the cost of accounting and financial reporting for multi-national companies, which would otherwise have to translate and reconcile records prepared under various country-specific standards. And according to the Managing Director of Accounting Recruiting at executive search firm, A.E. Feldman, “Any company that has a parent or a subsidiary internationally and requires consolidation will abandon GAAP and report based on IFRS.” Overall, the increased acceptance of IFRS has led to a surge in the number of companies following suite.
The SEC has stated that it will allow U.S. companies to choose between filing under IFRS or GAAP by 2010 or 2011. SEC Chief Accountant, Conrad Hewitt, put the date on convergence at five to 10 years from now as standard-setters and regulators appear to be taking “small steps instead of a big leap into IFRS,” according to Financial Week.
Chairman, Christopher Cox, says ultimately IFRS adoption will be critical in preserving the role of the United States in capital markets, fomenting cross-border capital formation and helping investors draw comparisons among companies, according to Financial Week. In an increasingly global financial community, candidates seeking accounting jobs stand to benefit from international perspective.
Executive recruiting firm, A.E. Feldman, says the number of accounting jobs for IFRS-trained accounting talent is increasing. The firm adds however, that competence with international financial reporting models is key and U.S. accountants who apply IFRS require solid analytical skills and sound judgment.
