Companies should begin preparing now for major accounting changes spurred by U.S. Securities and Exchange Commission efforts to adopt international standards.

Lisa Filomia-Atkas, a partner with Ernst & Young L.L.P., New York, gave that advice during a discussion of a SEC International Financial Reporting Standards “roadmap” project.

The SEC officials involved with the project hope to announce guidelines for adopting the standards – and deadlines for complying with the guidelines – later this summer.

Many expect the SEC to set the compliance deadline around 2013; and to permit public U.S. companies to implement the IFRS guidelines as early as 2011, Filomia-Atkas said here during a presentation.

Because companies may want or need 2 years of balance sheets for comparison purposes, they may need to begin submitting IFRS-compliant financials as early as 2010, Filomia-Atkas warned.

But, when foreign filers were first required to file with the SEC, the SEC required only 1 year of comparative data, so there might be some flexibility, Filomia-Atkas said.

It is not clear exactly how the SEC guidelines will affect non-public companies.

But, for the companies that are affected, the cost of preparing accounting systems could be greater than the cost companies recently experienced when they began complying with the Sarbanes-Oxley Act, Filomia-Atkas said.

Affected companies may have to change accounting systems, disclosure policies, accounting policies, and tax, regulatory and financing strategies, Filomia-Atkas said.

If, for example, a company has debt covenants in place, it might have to get waivers on some of the provisions in those covenants if earnings will be more volatile or there are accounting changes to debt and off-balance sheet items, Filomia-Atkas said.

Douglas Barnert, executive director of the Group of North American Insurance Enterprises, New York, talked about the looming change in account rules in a separate presentation here at the summer meeting of the National Conference of Insurance Legislators, Troy, N.Y.

Since March, experts who once talked about the “convergence” of U.S. and international accounting standards have been talking about “replacement” of the U.S. standards, and, rather than talking about “if” the changes will occur, the experts now talk about “when” the changes will occur, Barnert reported.

“What happens for general purpose accounting will drive insurance regulatory accounting,” Barnert added.

In some cases, the changes will require state legislators to pass legislation regarding insurance regulatory accounting and solvency requirements.

Barnert said insurance issues still under discussion include:

- The current exit value method of valuing liabilities, which is based on “hypothetical ‘transfers’ of obligations to policyholders.”

- Whether profits should be recognized as the insurer is released from risk or on “day one” of a contract.

- Whether risk margins should be released as the insurer is released from risk or in some other fashion.