Demand Mounts for Accountants with IFRS Expertise
The Securities and Exchange Commission (SEC) recently announced it voted to publish for public comment a proposed Roadmap, or series of benchmarks, that will guide the United States through the process of convergence from U.S. GAAP to International Financial Reporting Standards (IFRS). The move could ultimately unite the global business community and move all U.S. public companies under a single global standard by 2014. The Commission plans to make a decision by 2011 on whether the adoption of IFRS is in the public interest and would benefit investors. According to the SEC, “The increasing integration of the world’s capital markets, which has resulted in two-thirds of U.S. investors owning securities issued by foreign companies that report their financial information using IFRS, has made the establishment of a single set of high quality accounting standards a matter of growing importance. A common accounting language around the world could give investors greater comparability and greater confidence in the transparency of financial reporting worldwide.”
The question about whether the world is going to global standards is no longer ‘if,’ but ‘when,’” says KPMG Chairman and CEO Timothy P. Flynn in a statement. 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. Here in the U.S., however, the lingering lack of enthusiasm for convergence stems from mounting demand for professionals with sufficient knowledge of IFRS to make the conversion and to maintain IFRS financial statements, both among domestic and international operations. As a result, executive search firm, A.E. Feldman reports that accounting jobs are opening up as the need for IFRS-trained accounting talent intensifies.
“An international language of disclosure and transparency is a goal worth pursuing on behalf of investors who seek comparable financial information to make well-informed investment decisions,” said SEC Chairman Christopher Cox. “The increasing worldwide acceptance of financial reporting using IFRS, and U.S. investors’ increasing ownership of securities issued by foreign companies that report financial information using IFRS, have led the Commission to propose this cautious and careful plan. Clearly setting out the SEC’s direction well in advance, as well as the conditions that must be met, will help fulfill our mission of protecting investors and facilitating capital formation.”
The American Institute of Certified Public Accountants (AICPA) believes the SEC’s roadmap for the adoption of IFRS marks an important stage in what the group sees as the eventual move from U.S. GAAP to international accounting standards for public companies. “The AICPA supports one set of high-quality global accounting standards for public companies,” said Barry Melancon, AICPA President and CEO. “We believe the capital markets ultimately will insist on IFRS for public companies.”
Since March 2007, the SEC and staff have held three roundtables to examine IFRS, including one earlier this month regarding the performance of IFRS and U.S. GAAP during the subprime crisis.
Today, roughly 100 countries (including the European Union, Hong Kong, Australia, Russia, South Africa, Singapore and Pakistan) require or permit IFRS reporting. Approximately 85 of those countries require IFRS reporting for all domestic, listed companies, according to the SEC. Other countries are expected to follow suit over the next few years, including Chile (2009), Korea (2009), Brazil (2010), India (2011), and Canada (2011).
Moreover, Deloitte reports that 40% of the Fortune Global 500 companies currently use IFRSs, and that percentage is expected to increase significantly over the next couple of years since most companies outside the U.S. that currently use their home-country GAAP will be required to move to IFRSs.
Companies need to prepare for the day (in the not-so-distant future) when the SEC could designate a date for voluntary, or possibly mandatory, adoption of IFRS by all U.S. public companies.
“We know that the transition to IFRS in the United States will be challenging. It will involve training and education for every stakeholder in the capital markets. KPMG already is using the considerable global IFRS experience of our professionals in the U.S. and KPMG’s member firms, to assist U.S. clients, academics and investors as they begin the journey to global accounting standards,” says Timothy Flynn, Chairman of KPMG International.
The AICPA has already launched a web site, IFRS.com, to help its members and financial professionals learn about and stay informed on IFRS. “It is increasingly clear that as international standards gain wider acceptance and use in the United States, the accounting profession must keep pace,” said Barry C. Melancon, President and Chief Executive Officer of the AICPA. Big accounting firms, such as Deloitte and KPMG, also have IFRS content on their web sites.
The bottom line: almost every country, including the United States, will most likely be using IFRSs to some extent by 2011. According to Deloitte, “The globalization of the capital markets, the increasing global use of IFRSs, and the recent SEC activity are a wake-up call to U.S. companies that IFRSs should be taken seriously.”
A.E. Feldman’s accounting division is constantly researching industry trends and developments. To learn more about convergence or inquire about existing and future job opportunities in accounting the lines of communication are open. Contact A.E. Feldman’s President, Mitch Feldman, and the firm’s accounting recruiting team here.
