July 9, 2014
Full U.S. adoption of accounting standards unlikely
Full U.S. adoption of International Financial Reporting Standards (IFRS) appears unlikely to occur in the intermediate-term as the major accounting standard setters continue to move away from full convergence of their standards, according to a Fitch Ratings report.
Three joint, or former joint, FASB/IASB projects remain outstanding; financial instruments, insurance, and lease contracts. Differences in financial products between U.S. institutions and those following IFRS, as well as differences in application, meant that a one-size-fits-all accounting approach for financial instruments was problematic.
On the insurance front there were a number of concerns raised by U.S. constituents, including that the proposal would ensnare both insurance and non-insuring issuers. These considerations resulted in the joint insurance project also falling by the wayside, Fitch reports.
Discussions remain on track over a joint FASB/IASB standard for lease contracts. However, some detailed issues remain to resolve and there may be some minor differences in application between the final IFRS and U.S. GAAP standards.
In the interim, accounting updates during 2013 were mostly clean-ups of previous pronouncements or updates. As such, they are likely to have minimal impact to corporate credit metrics and cash flows.