The SEC and IFRS: Finally Coming to an End?

Allan B. Afterman

Editor's Note: SEC issues are among the topics with the highest level of interest for our readers. We are pleased to introduce a new monthly column, SEC Insights, by Allan B. Afterman, PhD, CPA. Afterman is the author of numerous treatises on financial reporting and SEC practice. He is formerly an adjunct professor in the Booth School of Business at the University of Chicago, and was assistant to the national director of SEC Practice at a major public accounting firm. In the column, Afterman presents his personal perspective on SEC topics of current interest. The ongoing saga about whether the SEC will require—or allow—the use of IFRS by U.S. domestic issuers has become downright wearying. It seems unlikely that U.S. companies will ever be required, or even permitted, to prepare their basic financial statements in accordance with IFRS. Whether U.S. GAAP or IFRS is the more conceptually valid framework is no longer the issue. At this stage, the issue is whether there are any real benefits for U.S. companies to make the switch to IFRS—and there appear to be few, if any at all. Furthermore, the level of support for IFRS in the United States that existed seven or eight years ago, at its peak, has since fallen considerably. For some reason, the SEC will not officially admit that the U.S.-IFRS movement is dead; instead, it keeps limping along year after year. In my view, doing so provides false hope for the ever-fading cadre of its proponents, which consist mainly of large, global, U.S.based companies whose international subsidiaries already apply IFRS. For such U.S. companies, the cost of switching to IFRS at home would be relatively minimal; whereas for smaller, domestic U.S. public companies, conversion costs would be enormous.