Talent in Demand as Firms Seek IFRS Expertise
Although the backlash against IFRS appears to be picking up steam, the conversion is seen as having a positive impact on foreign investment in U.S., according to a recent KPMG survey. The senior finance executives and institutional investors polled by KPMG, however, stress the need to prepare. U.S. companies need to gear up for the convergence of global accounting standards. Although convergence is still five years away, companies and leaders within accounting firms that are contemplating or are in the process of developing an IFRS conversion practice are not wasting any time examining its potential staffing and tax implications, according to FinancialWeek.
In fact, IFRS stands as a terrific opportunity for audit firms, according to FierceSarbox.com. The report states that the accounting industry is healthy and may see additional opportunities arise from the fallout of the credit crunch. Amid the trend, hiring qualified professionals remains the most critical concern for U.S. firms, according to the AICPA. Executive search firm, A. E. Feldman, reports that recruiting among accounting firms remains highly competitive. The firm says that accounting jobs are opening up as firms address mounting resource demands. Current opportunities include, tax manager jobs, audit jobs, international tax jobs, and business valuation jobs.
IFRS Looming
The globalization of business and finance has already led to the successful mass adoption of IFRS by upwards of 12,000 companies in more than 100 countries (including the European Union, Hong Kong, Australia, Russia, South Africa, Singapore and Pakistan). 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).
The Securities and Exchange Commission (SEC) announced in the fall of 2008 it voted to publish for public comment a proposed roadmap, or series of benchmarks, that will guide the U.S. 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.
Companies, however, will need to have two sets of books, one in IFRS and one using GAAP for two years prior to the transition for comparison purposes. Such efforts will require preparation and planning.
The SEC 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.”
Finance Execs Support IFRS Conversion: Study
A KPMG survey released on February 23rd finds that institutional investors and financial executives support the SEC’s proposed IFRS conversion timeline. The survey, which polled more than 130 senior corporate officers, controllers and other professionals, also shows that analysts see the conversion as having a positive impact on foreign investment in U.S. In fact, 65% of investment executives and analysts polled KPMG expect that U.S. adoption of IFRS will make U.S. capital markets more attractive to foreign investors.
Respondents of the KPMG survey, however, stress the need to prepare. The research highlighted a need for adequate education, preparation and dialogue. Just 16% of the investors and analysts and 20% of the financial executives polled say they currently have a solid understanding of IFRS. In addition, 77% percent of respondents want companies to begin explaining their IFRS conversion plans at least 1-3 years prior to the change.
“Although companies are understandably focused on managing through the current economic environment, many also recognize that a potential conversion to IFRS is just over the near-term planning horizon,” said Janice Patrisso, KPMG’s IFRS National Leader. “The survey findings reflect our discussions with clients as we work to help them assess their readiness and identify how various systems, processes and financial results could be affected,” she adds.
IFRS Backlash Gains Momentum
Still, the backlash against IFRS seems to be picking up steam as the new SEC Chairman, Mary Schapiro, has voiced misgivings about both the roadmap and the governance of the International Accounting Standards Board, according to WebCPA.
The report quotes an excerpt from a statement Schapiro penned to congressional leaders back in January: “When it comes to international accounting standards, it’s critical that these standards are converged in a way that does not kick off a race to the bottom. American investors deserve and expect high standards of financial reporting, transparency and disclosure - along with a standard-setter that is free from political interference and that has the resources to be a strong watchdog. At this time, it is not apparent that the IASB meets those criteria, and I am not prepared to delegate standard-setting or oversight responsibility to the IASB.”
Another more recent former SEC chief accountant, Conrad Hewitt, however, voiced his support for IFRS, notes WebCPA. The report quotes him as saying, “A large number of U.S. companies do more than 50 percent of their business overseas. It’s very important to get to one high-quality standard.”
Ian Mackintosh, Chairman of both the Accounting Standards Board in the U.K. and the National Standard-Setters Group, also urges the U.S. to implement IFRS, according to a separate WebCPA report. Mackintosh states that it is unimaginable to have global standards without the U.S. on board.
The Financial Accounting Standards Board (FASB) and its parent organization, the Financial Accounting Foundation (FAF), have given a thumbs-up to the proposed roadmap to IFRS, but they are urging more consultation and study, according to WebCPA.
The report states that the FAF and FASB are calling on the SEC to set up a broad-based advisory committee with representatives from the many different parties that have a stake or interest in the U.S. financial reporting system. The advisory committee, if it recommends changing to IFRS, would then be charged with developing and implementing a transition plan or blueprint to minimize the cost and disruptions to investors, companies and other participants.
Are you an accountant or IFRS convergence specialist? If you want to grow your career or discuss your company’s talent needs, contact A.E. Feldman’s President, Mitch Feldman today.
