GFS LinkedIn
GFS Facebook
GFS Twitter
GFS RSS feed

US condorsement ‘only viable option’

Thursday 19 January 2012 – by [email protected]

The US is likely to introduce IFRS accountancy standards in a “prolonged, cautious and incremental” way, rating agency Fitch has warned.

In a report released on Wednesday, Fitch argues that the country is likely to bring in the standards in a compromised endorsement approach labelled ‘condorsement’.

The method, which endorses new standards from the IASB into national GAAP, is the “only viable option” for the US to introduce the international accounting standards, the rating agency argues.

Despite promising to decide by the end of 2011 if it would permit IFRS to be used across the US, the Securities and Exchange Commission is still yet to make a decision on IFRS use.

The industry “may have to wait a while” for the SEC’s verdict, Fitch warns, with its decision hinging on the completion of major projects relating to financial instruments, revenue recognition and leases.

The SEC has three options to incorporate the standards, Fitch says. It could elect for full adoption, where standards issued by the International Accounting Standards Board will be fully implemented without any carve-outs, continuing to converge its accounting standards with those issued by the IASB, and endorsing new international standards into its own GAAP.

The latter option is the only workable choice for the SEC, it argues, with wholesale adoption “out of contention” and convergence highly unlikely, given a diminishing US influence on the standards.

“This leaves the endorsement approach as the only viable option,” Fitch says.

“This compromised approach not only preserves some measure of control of the accounting standards that will be incorporated into US GAAP, but it should also preserve FASB’s active participation in global standard setting.

“Fitch still expects the US to move forward with a plan to incorporate IFRS into US GAAP, albeit in a prolonged, cautious and incremental way,” it adds.

Send us your thoughts (in strict confidence) or submit an article in response:
Email: [email protected]

Post as Anonymous
  Display name
Please, enter security code

No comments yet.