At long last, the Securities and Exchange Commission (SEC) has proposed a roadmap for adopting International Financial Reporting Standards (IFRS). Large U.S.-based multinationals could switch to IFRS from Generally Accepted Accounting Principles (GAAP) in 2010. A vote in 2011 would determine whether to mandate the international standards for all public U.S. companies–on a staggered schedule.
Companies with market values exceeding $700 million would switch to IFRS in 2014; companies worth $75 million to $700 million would make the change in 2015; and smaller companies would have until 2016.
The transition to IFRS is conditional. First of all, collaboration to merge standards must continue unabated between the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). IASB also must obtain a stable and independent source of funding. The SEC worries that IASB relies too much on voluntary contributions from companies and other sources that could withhold payments to influence policy changes.
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