IFRS continues to receive attention in the US despite the recent end to an era of joint standard setting. Erin Bennett, US Accounting Consulting Services, looks at why IFRS is still important in the US.

If you are looking for a prediction of when the US will adopt IFRS, you should stop reading now. A prediction at this point would be speculative to say the least. The only thing to say right now is 'not in the near future'. That said, US markets are continuing to grow familiar with IFRS but how and why?

For US preparers, public or private, big or small, knowledge of IFRS is important. IFRS is increasingly relevant to many US businesses as they engage in cross-border mergers and acquisitions1, report to their non-US stakeholders, and manage their overseas operations.

From an investor perspective, the need to understand IFRS is arguably even greater. US investors keep looking overseas for investment opportunities. Recent estimates suggest that over $6 trillion of US capital is invested in foreign securities. The US markets continue to allow non-US companies to prepare their financial statements using IFRS. There are currently over 450 non-US filers with market capitalization in the multiple trillions of US dollars who use IFRS without reconciliation to US GAAP.

Nearly 50% of the foreign private issuers file financial statements prepared in accordance with IFRS. In a recent speech, Keith F. Higgins, Director of the SEC's Division of Corporation Finance2, observed 'that many foreign companies continue to find the US public market attractive'. He also acknowledged the challenges faced by foreign companies over and above US companies.

Meanwhile, the IASB and FASB are further apart than they have been in many years on joint standard setting. The joint revenue standard expected later this month is another opportunity to test how the US and international community work with the same set of words. Business combinations and segments guidance are already virtually aligned. But will continued exposure to IFRS move the US closer to adoption or further away? Only time will tell.

Footnotes

1. For more information, see http://www.pwc.com/us/en/audit-assuranc-eservices/accounting-advisory/publications/cross-border-transaction-financial-reporting-implications.jhtml

2 http://www.sec.gov/News/Speech/Detail/Speech/1370541190424#.U1pjhPldVTI

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