Int'l Accounting Effects: The PCAOB's Strategic Plan

I believe we'll soon be hearing about the SEC's plans for allowing companies to use International Financial Reporting Standards here in the United States. The Public Company Accounting Oversight Board, a sort of subsidiary of the SEC that provides oversight of the accounting firms that audit publicly-traded companies, issued its strategic plan on March 31. Some of the goals listed in the document indicate how seriously the PCAOB is taking the pending convergence of US and international accounting regimes. Mentioned as a development that may impact the PCAOB's programs and operations:

...The SEC has undertaken certain rulemaking initiatives related to the acceptance of financial reporting in IFRS. In particular, the SEC adopted rule amendments allowing foreign private issuers to prepare their financial statements in accordance with IFRS, without a reconciliation to U.S. GAAP. Based on this rule change, the PCAOB has devoted and plans to continue to devote resources to, among other things, training staff in IFRS. If the SEC were to require U.S companies, or give them the option, to prepare their financial statements under IFRS as opposed to U.S. GAAP, the PCAOB would have to devote additional resources to IFRS training to supplement the training described above, as well as possibly recruiting individuals with knowledge and expertise in IFRS. In addition, the Board would have to evaluate the need for any additional adjustments to its programs and consider the need for new initiatives to prepare for such a significant transition in financial reporting and address any concomitant risks related to public company auditing. In any event, the PCAOB plans to consider its relationship with the International Accounting Standards Board (“IASB”) to stay abreast of accounting developments and enhance the IASB’s appreciation for the effect of its work on public company auditing.

One doubts that this would be at the top of the PCAOB's list of possible developments that could impact its operations if it wasn't likely to become a reality. Also, the PCAOB expects to inspect 72 non-US registered accounting firms in 2008. That number is projected to grow 40% in 2009 to 101.

It seems as if the IFRS groundwork is being put into place, quietly. Stay tuned.

Comments

[Blythe:]

It's great to read that the investment community is waking up to the change from GAAP to IFRS. As someone who informs management about IFRS convergence and the competitive implications, I am shocked that the press has not made a bigger deal of this. Can you imagine comparing two P&Ls with dramatically different results solely because the fruit-salad of different accounting treatment and reporting? It's coming soon.

2008 Apr 13 11:55 AM