The results of the September 2007 "Business Outlook Survey" conducted jointly by Duke University and CFO magazine were released earlier this month. In reporting the results, most media outlets focused on one particular finding: only 9% of the U.S. CFOs surveyed indicated that they would be "very likely" to file their financial statements "according to International Financial Reporting Standards (IFRS) instead of U.S. GAAP if the SEC were to allow it." Media commentary on that statistic generally seemed to infer that the overwhelming majority U.S. CFOs are opposed to (or uninterested in) switching from U.S. GAAP to IFRSs. Unfortunately, most media reports abused the reported statistic by robbing it of its context among the other results of the survey.
Specifically, most media reports omitted or "buried" the statistic that only 14% of the U.S. CFOs surveyed described themselves as "very familiar" with IFRSs. It is reasonable to assume that most, if not all, of the 9% of U.S. CFOs who indicated that they would be "very likely" to file using IFRSs if permitted by the SEC are among the 14% who described themselves as "very familiar" with IFRSs. That assumption leads to the conclusion that most U.S. CFOs who are very familiar with IFRSs would be very likely use IFRSs given the opportunity -- an entirely different story from what was commonly reported in the media.
Furthermore, by side-stepping the "familiarity" statistic, the media failed to convey a critical point: the overwhelming majority of U.S. CFOs are not sufficiently familiar with IFRSs to make an informed choice between using U.S. GAAP vs. IFRSs. Consequently, the apparent low interest in IFRSs can reasonably be attributed to widespread ignorance about IFRSs rather than the informed judgment of U.S. CFOs about the merits of IFRSs vs. U.S. GAAP. Perhaps instead of headlines saying "Only 9% of US companies keen to adopt IFRS," [Financial Times, September 12, 2007], the headlines should have said "86% of U.S. CFOs Don't Know Enough About IFRS."
The complete survey results are available at http://www.cfosurvey.org.
