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4-in-10 CEOs Agree With SEC’s Decision to Let Foreign Companies Use IFRS in the U.S.

September 24, 2008

In a Grant Thornton LLP national survey of 250 U.S. chief executive officers, 40 percent agree with the Securities and Exchange Commission’s decision to permit foreign firms listed on U.S. exchanges to file financial statements prepared according to the International Financial Accounting Standards (IFRS) without reconciliation to U.S. Generally Accepted Accounting Principles (GAAP).

“We supported the SEC’s decision to remove the costly and, increasingly less relevant reconciliation requirement for foreign companies,” notes Gary Illiano, Partner-in-Charge of International and Domestic Accounting. “More and more, people are starting to become familiar with IFRS, which is clearly the wave of the future.”

More than half (61%) of respondents report having at least some experience in preparing financial statements according to IFRS, but 20 percent have very little experience and 19 percent have none.

The vast majority of respondents (97%) agree that accounting practices become at least somewhat more complex when dealing with foreign businesses as opposed to just domestic companies. The most challenging aspect that CEOs find when dealing with foreign businesses, in relation to managing accounting practices, is complying with U.S. accounting practices. Other top challenges include loss of managerial control and dollar or currency volatility.

Do you agree with the SEC’s decision to permit foreign firms listed on U.S. exchanges to file financial statements prepared according to the IFRS without reconciliation to U.S. GAAP?(1)

 Strongly agree                                         16% ---------------------------------------------------------- Somewhat agree                                         24% ---------------------------------------------------------- Neither agree nor disagree                             31% ---------------------------------------------------------- Somewhat disagree                                      20% ---------------------------------------------------------- Strongly disagree                                       9% ---------------------------------------------------------- 

How much experience does your company have in preparing financial statements according to International Financial Reporting Standards (IFRS)?(1)

 A lot of experience                                    26% ---------------------------------------------------------- Some experience                                        35% ---------------------------------------------------------- Very little experience                                 20% ---------------------------------------------------------- No experience                                          19% ---------------------------------------------------------- 

In your mind, how much more complex do accounting practices become when dealing with foreign business and customers as opposed to just domestic partners and customers?(1)

 Much more complex                                      35% ---------------------------------------------------------- Somewhat more complex                                  62% ---------------------------------------------------------- Not anymore complex                                     4% ---------------------------------------------------------- 

How capable are your accounting and financial systems to manage business with foreign businesses/partners?(1)

 Very capable                                           36% ---------------------------------------------------------- Somewhat capable                                       39% ---------------------------------------------------------- Somewhat incapable                                     19% ---------------------------------------------------------- Very incapable                                          7% ---------------------------------------------------------- 

How challenging do you consider the following aspects to be in relation to managing accounting practices when dealing with foreign businesses?(1) (Table reflects the percentage of respondents selecting 7 & 6, based on a scale of 1 to 7, where 1 is “not at all challenging” and 7 is “extremely challenging.”)

 Compliance with U.S. accounting practices              52% ---------------------------------------------------------- Loss of managerial control (loss of management and operational control within a business)            45% ---------------------------------------------------------- Dollar or currency volatility                          43% ---------------------------------------------------------- Political risks (foreign companies' influence over U.S. policies                                    41% ---------------------------------------------------------- 

(1)Percentages have been rounded to the nearest whole number and therefore may not all add up to 100.

For insights, information on the latest developments or to receive a quarterly update from Grant Thornton International Ltd IFRS team, visit Grant Thornton’s IFRS Resource Center at: Grant Thornton’s IFRS Resource Center.

About the Business Leaders Survey: Foreign Investment

In its eighth year, the Grant Thornton LLP Business Leaders Survey captures the thoughts of business leaders on economic and financial reporting issues. The current survey of 250 CEOs was completed June 16-27, 2008.

About Grant Thornton LLP

The people in the independent firms of Grant Thornton International Ltd provide personalized attention and the highest quality service to public and private clients in more than 100 countries. Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd, one of the six global audit, tax and advisory organizations. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity.

In the U.S., visit Grant Thornton LLP at www.GrantThornton.com.