The Convergence Blog™

The Convergence Seminar™

On October 10, 2007, Leveraged Logic will host The Convergence Seminar at the NCACPA Education Center in Morrisville, North Carolina ("Triangle" area, near Raleigh-Durham Airport). Like The Convergence Blog, the Seminar is designed to help U.S. accounting and finance executives prepare for "the next big challenge in corporate financial reporting." As a participant in this one-day seminar, you will learn how Convergence is changing corporate financial reporting in the U.S. -- as well as what you will need to do in order to meet the challenges of Convergence.

I will be the presenter for this seminar, which is co-sponsored by the North Carolina Triangle Area Chapter of the Institute of Management Accountants (IMA).

For more information about the Seminar, visit http://TheConvergenceSeminar.com.

Second International Accounting Convergence Seminar

On November 15-16, 2007, TTC will host its second International Accounting Convergence Seminar at the Sheraton Maria Isabel Hotel in Mexico City. As previously reported in The Convergence Blog, the inaugural session of this Seminar (May 2007) was the first Convergence event in North America designed for executives of companies that operate in multiple NAFTA countries, i.e., the United States, Mexico, and Canada. The Seminar is designed to help participants manage the rapid changes in financial reporting that are occurring in NAFTA countries as a result of the international convergence of accounting standards.

Once again, I will be the presenter of the Seminar. For more information, visit http://TheConvergenceSeminar.com/?Go=NA.

"Get Ready: Four Trends to Watch"

On August 14, 2007, Jobs in the Money Career News & Advice posted the article "Get Ready: Four Trends to Watch" by Jon Jacobs. The article featured my observations on trends that will require U.S. preparers and auditors to enhance their skill-sets -- including the trend towards the convergence of U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards(IFRSs).

Compliance Week's "IFRS Primer"

On October 25, 2007, Compliance Week (the leading newsletter on corporate governance, risk and compliance) will sponsor a one-day "primer" on International Financial Reporting Standards (IFRS) at the Marriott Renaissance Mayflower Hotel in Washington, DC. The purpose of the event is to explain what International Financial Reporting Standards are and to help you determine whether your company would benefit from using them.

This event is designed especially for senior executives including chief financial officers, chief accounting officers, and chief audit officers. I will present the concluding session of the event.

For more information, visit http://conference.complianceweek.com/ifrs/.

Japan takes a major step towards convergence with IFRSs

On August 8, 2007, the Accounting Standards Board of Japan (ASBJ) and the International Accounting Standards Board (IASB) jointly announced an agreement to accelerate convergence between Japanese GAAP and International Financial Reporting Standards (IFRSs).

As part of the new "Tokyo Agreement," the two boards will seek to eliminate by 2008 major differences between Japanese GAAP and IFRSs, with the remaining differences being removed on or before mid-2011.

Commentary: The impact of Japan's accelerated shift towards IFRSs cannot be ignored. As measured by Gross Domestic Product (GDP), Japan's economy is the second-largest in the world among individual countries, trailing only the United States. Japan is also home to the world's second largest stock market (as measured by market capitalization), again trailing only the U.S.

Financial executives in companies having related entities that use Japanese GAAP should be aware that Japan's financial reporting standards will change significantly in the next few years and, once converged with IFRSs, will continue to change significantly for many years thereafter.

U.S. financial executives should be aware that direct convergence with U.S. GAAP has once again been rejected in favor of IFRSs by a major economic power. Japan's recent action highlights the increasingly isolated position of U.S. financial reporting standards and increases the incentives for the U.S. to converge U.S. GAAP with IFRSs, which would affect all U.S. companies, not just multi-nationals.

Read the IASB's Press Release here.

SEC Publishes Concept Release On Allowing IFRSs for U.S. Issuers

On August 7, 2007, the U.S. Securities and Exchange Commission (SEC) published a "Concept Release" to obtain information about the extent and nature of the public's interest in allowing U.S. issuers to prepare financial statements in accordance with International Financial Reporting Standards (IFRSs) for purposes of complying with the SEC's rules and regulations. Currently, U.S. issuers must prepare their financial statements in accordance with generally accepted accounting principles as used in the United States ("U.S. GAAP").

The full text of the Concept Release is available at http://sec.gov/rules/concept/2007/33-8831.pdf.

Comments on the Concept Release will be accepted through November 13, 2007. Comments may be submitted here. Comments received to date may be viewed at http://sec.gov/comments/s7-20-07/s72007.shtml.

Commentary: For readers of The Convergence Blog, the SEC's Concept Release comes as no surprise. It underscores the fact the Convergence is not a "foreign" concept that represents a forsaking of the interests of U.S. companies and their investors. Instead, Convergence has intense support within the U.S. as evidenced by the SEC aggressive efforts to bring it about because it makes economic sesnse for U.S. investors. If the kinds of rule changes described in the Concept Release ultimately come about, U.S. issuers will have new opportunities to do something that many companies have long had the incentive to do, i.e., use a single set of financial reporting standards globally.

Another "Conversation with Bruce Pounder" at AccountingWEB.com

On August 8, 2007, AccountingWEB.com published "A conversation with Bruce Pounder: The impact of convergence on U.S. GAAP". That interview gave me the opportunity to explain the many reasons why ALL companies that use U.S. GAAP will be impacted by the phenomenon of Convergence.

India commits to convergence with IFRSs

On July 24, 2007, the Council of the Institute of Chartered Accountants of India (ICAI) decided to fully converge with International Financial Reporting Standards (IFRSs) for accounting periods beginning on or after April 1, 2011. As of that date, all publicly-accountable enterprises (including listed companies, banks, and insurance companies) will be required to adopt IFRSs.

Commentary: India's commitment to IFRS convergence is significant as India's economy is large, growing, and increasingly intertwined with the economies of developed nations such as the United States.

Financial executives in companies having related entities that use Indian GAAP should be aware that India's financial reporting standards will change significantly in the next few years and, once converged with IFRSs, will continue to change significantly for many years thereafter.

Direct convergence with U.S. GAAP has once again been rejected in favor of IFRSs by a major economic power. India's recent action highlights the increasingly isolated position of U.S. financial reporting standards and increases the incentives for the U.S. to converge U.S. GAAP with IFRSs, which would affect all U.S. companies, not just multi-nationals.

Read the IASB's Press Release here.

SEC Votes to Publish Concept Release On IFRSs for U.S. Issuers

On July 25, 2007, the U.S. Securities and Exchange Commission (SEC) voted unanimously to publish a "Concept Release" to obtain information about the extent and nature of the public's interest in allowing U.S. issuers to prepare financial statements in accordance with International Financial Reporting Standards (IFRSs) for purposes of complying with the SEC's rules and regulations. Currently, U.S. issuers must prepare their financial statements in accordance with generally accepted accounting principles as used in the United States ("U.S. GAAP").

U.S. GAAP vs. IFRS: Accounting for Customer Loyalty Programs

My comments on the differences between U.S. GAAP and IFRS with regard to accounting for customer loyalty programs appeared in the "Accounting Industry Update" section of the July 17, 2007 issue of Compliance Week (subscription required). I have posted a more-detailed analysis of the situation here.