UPDATE:US Companies Seek SEC Decision On Accounting-Rules Switch
April 20 2009 - 6:36PM
Dow Jones News
Some companies are urging the Securities and Exchange Commission
to speed up its decision on a proposal to require U.S. companies to
switch to international accounting rules.
Monday marked the deadline for the public to comment on the
SEC's 165-page "road map" to possibly require companies to scrap
U.S. generally accepted accounting principles, known as GAAP, in
favor of international financial reporting standards, or IFRS,
starting in 2014. The plan aims to create a uniform accounting
standard to help investors compare financial statements between
U.S. and foreign companies.
As proposed, the SEC would make a final decision on the issue in
2011. If it decides to require the switch, the SEC may stagger the
timeline for implementing the new rules, giving large companies
until 2014, followed by mid-sized companies in 2015 and small
companies in 2016. But some large companies say the proposed
timeline is problematic because it may not give them enough time to
make the transition, and they asked the SEC to clarify its
plans.
"Confusion is widespread in the marketplace as companies try to
discern the SEC's timeline and sense of urgency with respect to
IFRS," wrote Brian F. Miller, senior vice president of corporate
governance for retailer Kohl's Corp. (KSS). "We respectfully ask
the SEC to be clearer about any changes that might be made to the
roadmap and timing of convergence so that company resources can be
strategically deployed."
A spokesman said commission policy doesn't permit SEC officials
to publicly discuss rule-making comments. Now that the comment
period has closed, the SEC staff will sift through the letters and
decide whether to recommend action.
While it's possible the SEC could change the timing of the road
map's implementation, SEC Chairman Mary Schapiro hasn't mentioned
the transition to IFRS as one of her top priorities in any of her
major recent speeches in the U.S. During her confirmation hearing,
she told the Senate Banking Committee she had concerns about the
cost of conversion for companies and the level of detail of
international accounting standards compared to U.S. standards.
At a meeting of the International Accounting Standards Committee
Foundation Trustees and Monitoring Board in London earlier this
month, however, Schapiro expressed support for a universal
accounting standard, according to a transcript.
If the SEC implements the road map in 2011, large companies
could be required to provide three years of audited comparative
financial statements using both GAAP and IFRS beginning in 2012 - a
timeline many said is too early. Some large companies are eligible
to begin a voluntary shift in 2010, but without more direction from
the SEC, some companies said they are reluctant to incur the
costs.
"In the absence of a date certain for the mandatory requirement
for IFRS, we would be unwilling to make the major investment
required to implement IFRS," wrote Patrick Mulva, vice president
and controller of Exxon Mobil Corp. (XOM).
Ernst & Young LLP, which favors transitioning to IFRS,
suggested that if the SEC is unwilling to speed up its vote on the
proposal, then it should extend the timeline for implementation of
the rules or only require large companies provide one year's worth
of comparative financial statements.
-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634;
sarah.lynch@dowjones.com