Wednesday, July 2, 2008

No New Accounting Rules for Three Years?

Accounting rulemakers are starting to talk about a moratorium on new accounting rules. But the proposal comes with one giant catch: you have to adopt IFRS first.

Although the Securities and Exchange Commission has yet to suggest a date by which U.S. companies might be required to adopt International Financial Reporting Standards, the actual mechanics of such a massive switch are beginning to dominate accounting discussions. IFRS adoption was a recurring theme at a recent public forum held by the Financial Accounting Standards Board — and with that discussion came mention of a surprising idea.

"If we set a date for adopting [IFRS], we need a minimum of a year, if not two years, of no new accounting systems," said FASB member George Batavick. "Companies need a break."

Batavick, who said he is a "strong believer in moratoriums before and after" a future switch to IFRS, discussed the concept in response to a question from the audience at a mid-year update webcast. He also said there should be "at least a one-year quiet period" during which no interpretive guidance would be issued.

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