LONDON: The United States is likely to signal, perhaps this week, only qualified support for switching to global accounting rules, said a top standards official on Monday.
The US Securities and Exchange Commission (SEC) has said it will give more clarity by year-end on whether it will switch to rules authored by the International Accounting Standards Board (IASB) which are used in 120 countries.
The SEC is due to give a keynote speech on Monday morning in Washington, where the American Institute of CPAs (AICPA) is holding its annual accounting and auditing conference over the next three days. Regulators often use the conference to make significant policy announcements.
Commenting on possible outcomes, IASB Vice Chairman Ian Mackintosh said: "One extreme would be a "big bang" wholesale adoption like in Canada, and the other would be a flat 'No'."
"My betting is for something in between," he told a conference organised by the ICAEW accounting body on Monday.
Mackintosh noted an SEC paper outlining a possible system of "condorsement" where each IASB rule is adopted individually rather than a wholesale switch -- an idea backed by the trustees of the US Financial Accounting Standards Board (FASB).
"Probably the SEC will come out with some sort of exposure draft or consultative paper with their view forward," Mackintosh said.
The IASB will then have to decide, through consultation with its members, how to respond to the US announcement and IASB Chairman Hans Hoogervorst will make an "important" speech to the US conference on Tuesday, Mackintosh said.
Many big US firms are keen to make the switch in order to cut reporting costs as they have many subsidiaries across the world that file statements using IASB rules.
Smaller, domestic-focused US companies and some vocal investor groups say IASB rules are not detailed enough and many in Congress don't want to give up regulatory sovereignty to a body based in London.
Accounting industry officials say the SEC will probably have to go beyond broad support to some sort of clear commitment and timeline to switch to IASB rules. This could be over several years and just for large companies.
Leaders of the Group of 20 economies (G20) want a single set of global accounting rules to make life easier for investors and regulators. Getting the United States to sign up is just one step along the way and other countries are becoming impatient.
Asian members want the IASB to turn to their wishlist of rule changes after years of getting bogged down in negotiations with the United States.
An original convergence deadline of June 2011 was shifted to the end of this month but disagreements between IASB and FASB over key rules have pushed this back further.
"It's an exercise in diminishing returns. It's an obstacle to effective standard setting and condorsement will only take more time," said Bill Hicks, a financial reporting panel member at UK industry lobby CBI. G20 leaders in Cannes last month called for an update on convergence work in April 2012.
Mackintosh said there was a possibility of completing the main rules being converged by the end of next year and that many in the industry want a period of reflection after they are implemented in 2015 or 2016.
"I think we need some time for some big picture thinking. What is financial reporting about?" he added.
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