Us Gaap's Adoption of Ifrs

Arguments over the feasibility of implementation of the International Financial Reporting Standards (IFRS) by the United States last for many years. Although U.S. does lots of commitments to the International Accounting Standards Board (IASB), the roadmap to apply IFRS is still implicit and the timeline is unknown.

The U.S. Securities and Exchange Commission (SEC) is the most ambitious and strict securities market governor in the world. As an official federal agency, SEC aims to protect investors, retain transparent and efficient markets, and promote capital formation. As one of SEC’s thirteen offices, the Office of the Chief Accountant helps the Commission to execute its duty under the securities law to build accounting standards, and to supervise the private segment standards-setting program.

As the most rigorous national regulatory body in the World, SEC attempts to secure compliance with accounting standards. Since 2002, in the Norwalk Agreement, the FASB and IASB has been cooperating to match U.S. GAAP and IFRS in order to produce compatible and high quality accounting rules that was applied by both domestic and cross-border financial reporting (FASB, 2008). In February 2006, the FASB and IASB announced a Memorandum of Understanding (MoU) that states the significance of the FASB - IASB joint program and specific targets to be reached by 2008 (FASB, 2008). Based on all efforts by two Boards, the SEC canceled the reconciliation prerequisite. Thus, non-U.S. firms that apply IFRSs as approved by the IASB do not need to make reconciliation to be listed in the United States. After that, an IFRS Work Plan was published by the Commission to gain information to determine whether, when, and how the current financial reporting system for U.S. issuers could be transmitted to a new system including IFRS. And then, it also published a Staff Paper investigating one possible approach of absorbing IFRS into the U.S. financial reporting system, namely the “endorsement” method. On July 13, 2012, the Commission released the expected Final Staff Report on its IFRS Work Plan. Although the Staff Report is productive and further contributes to the process of IFRS adoption, the Work Plan did not answer the original question of whether, how or when the United States should change to the IFRS. The SEC spokesman John Nester said, “Staff have been working on a report and separately developing a recommendation, but they have not established a timetable for completing a recommendation.” Anyhow, regarding the adoption of the IFRS in the U.S., SEC participates in the whole process and plays an important role within it. The Commission has stimulated the progress of IFRS as a uniform accounting structure to assist cross-border offerings and further incorporated the IFRS into the financial reporting system in the U.S. (Jones Day, 2009).

From 2002 to the present, whether United States would adopt the IFRS have really been discussed for a long