SEC commissioners voted Aug. 27 to publish for comment a proposed “roadmap” that could require U.S. corporate issuers to begin filing accounting statements using International Financial Reporting Standards, or IFRS, as early as 2014. Officials say the commission would make a decision by 2011 on whether IFRS is in the “public interest,” while a finite number of select companies will be allowed to file in IFRS as early as 2009.

“An international language of disclosure and transparency is a goal worth pursuing on behalf of investors who seek comparable financial information to make well-informed investment decisions,” SEC Chairman Christopher Cox said in a press release noting the plan. “The increasing worldwide acceptance of financial reporting using IFRS, and U.S. investors' increasing ownership of securities issued by foreign companies that report financial information using IFRS, have led the [SEC] to propose this cautious and careful plan.” U.S. issuers now use the Generally Accepted Accounting Principles, or “U.S. GAAP.”

The Council of Institutional Investors (CII), which represents U.S. public, union, and corporate pension funds, expressed concern about whether the IFRS will be as rigorous and useful as GAAP. The council also questioned the independence of the International Accounting Standards Board (the London-based group that oversees IFRS) and said the board needs more investor representation. “We urge the SEC to make the switch when, and only when, international standards meet or exceed the high level of investor protection that current U.S. standards afford,” Jeff Mahoney, CII's general counsel, said in an Aug. 28 statement.

The SEC’s move is a signal of the growing dominance of IFRS. More than 100 nations—including all European Union member countries—currently require or permit IFRS reporting, according to the SEC. Approximately 85 of those countries require IFRS reporting for all domestic, listed companies. Moreover, a host of countries including Canada, India, Brazil, and South Korea are slated to use IFRS in the coming years.

While some U.S. companies with a significant global presence may begin using IFRS in 2009, few companies overall appear ready to adopt IFRS. A 2008 survey by accounting firm Deloitte & Touche found that 36 percent of respondents had not yet considered a plan for adoption of IFRS. Moreover, nearly 42 percent of respondents indicated they would not consider adopting IFRS, while 30 percent would, and a further 18 percent were undecided. The full roadmap will be published in the Federal Register; public comments will be due back to the commission within 60 days of publication.

RiskMetrics Group will hold a webcast on Wednesday, Sept.17 at 10 a.m. EDT titled, Accounting Convergence: What Investors Need to Know about IFRS. Marc Siegel, RiskMetrics Group's Head of Accounting Research and Analysis, will outline what investors can expect from such changes. To register for the webcast, please visit here.