Looking Ahead to the New Year

An interview with AICPA President and CEO Barry Melancon, CPA

The next year will be an important one as the accounting profession continues on the path to adopting International Financial Reporting Standards. Below, AICPA President and CEO Barry Melancon, CPA, addresses some of the questions and issues surrounding IFRS.

Do you envision private companies switching over to IFRS for SMEs?

Awareness of the International Accounting Standards Board's standard for small and medium-sized entities, or private companies in the U.S., has been growing since its July 9 issuance. The AICPA supports giving U.S. private companies another alternative to U.S. GAAP so they can choose the accounting and financial reporting framework that best suits their needs and those of their financial statement users. In fact, IFRS for SMEs is available for use here in part because our governing Council in May 2008 voted to recognize the IASB as an international accounting standard setter, thus removing a potential barrier for those who would consider adopting it. More broadly, IFRS for SMEs has stirred further discussion about the future of financial reporting for private entities in the U.S. The needs of private company financial statement users differ from those of public companies. The AICPA is working to provide a pathway for that outcome with U.S. GAAP.

How will the AICPA help members transition to IFRS?

As soon as we saw IFRS on the radar, we began to elevate our members' awareness of possible IFRS adoption for public companies. The AICPA began providing news and information, education, training and other resources to help them understand what IFRS is about, how it is different from U.S. GAAP and the systems changes it would bring. CPAs should not just be knowledgeable and skilled in IFRS, but help lead the major change should the Securities and Exchange Commission require it for public companies. In May 2008 we launched IFRS.com, a Web site full of resources -- news updates, case studies, CPE, publications, videos and FAQs -- to help members learn what's involved in terms of conversion to IFRS. We continue to populate the site with important and timely information. On an advocacy front, we are active with standard setters and regulators to promote a smooth process. We also will continue our member readiness surveys, which began in April 2008, to assess their preparedness and help guide our efforts to enhance it. And it's working. Compared with April 2008, readiness has significantly improved, more members say they need or want IFRS knowledge and they believe the U.S. should move toward adoption eventually.

Why was a decision made to include IFRS on the CPA Exam in 2011?

IFRS had been gaining momentum globally for several years when it got traction with the SEC in 2007. We had our eyes on convergence since the 1990s but SEC actions regarding foreign filers and a concept release on IFRS for U.S. companies in 2007 really pushed IFRS to the forefront. In addition, IFRS already is used quite a bit in the U.S., primarily because of subsidiaries of foreign companies. Combine that with the private company option and IFRS obviously is an active financial reporting framework in this country. So when the Board of Examiners was issuing an exposure draft in May 2008 regarding the exam's content, it raised the issue of including IFRS questions, which was part of our effort to provide an orderly transition for the profession. The comments came back in favor. At the same time, a new generation of the exam, what we call CBT-e, was planned for launch in 2011. The board decided, based on stakeholder input, to include IFRS questions as part of that launch when other content changes will go into effect. All studies show it's important for entry-level CPAs to have knowledge of IFRS -- not only for accounting specifically but for their careers. We are operating in a global economy and CPAs will at least need to be bilingual, speaking the language of IFRS and U.S. GAAP in the years to come.

Your Predictions

Are you aware of the SEC's recent statements that it will provide clarity on the IFRS road map by winter?

Yes	47.99%
No	33.62%
I thought I heard that	18.39%

Do you think U.S. public companies ultimately will use IFRS as promulgated by the IASB?

Yes, but not until 2016 or later	40.44%
Yes, and start by 2015	36.40%
No -- U.S. GAAP from the FASB is preferred	13.60%
Yes, but it will be voluntary	5.51%
Don't know/unsure	4.04%

Do you plan to step up your IFRS training after the SEC releases its expectations for IFRS?

Yes, somewhat	35.29%
Yes, a great deal	33.33%
No	31.37%

Events and Resources

Events and Resources related to IFRS

• AICPA International Business, Accounting, Auditing and Tax Conference -- June 23 and 24, 2010, in Washington, D.C.
• Are You Ready for IFRS? Moving Beyond the Basics
• IASeminars -- IFRS Training
• IFRS Accounting Trends & Techniques
• IFRS Digest: What U.S. Practitioners and Entities Need to Know Now
• IFRS Quarterly Webcast Subscription Series
• Introduction to IFRS: Grasping the Big Picture
• IFRS Resources Web Site
• IFRS Frequently Asked Questions
• IFRS for Small and Medium-Sized Entities
• The Effects of IFRS Implementation on Tax

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