Study: Early Adoption of IFRS by Companies Unlikely in Current Conditions

Study: Early Adoption of IFRS by Companies Unlikely in Current Conditions

Study: Early Adoption of IFRS by Companies Unlikely in Current Conditions

- Major Challenges for IFRS Adoption Still Exist –
- Communication, Global Planning and Training Crucial to Meet Standard Requirements -

FLORHAM PARK, N.J., March 9, 2009 - While many financial executives have begun the initial stages of convergence with International Financial Reporting Standards (IFRS), early adoption in 2009 for qualifying companies will be difficult, if not impossible, due to the significant time requirements, according to a new report released today by Financial Executives Research Foundation (FERF) and Resources Global Professionals. The report also finds that a crucial milestone for companies will be the SEC's anticipated 2011 decision on whether or not mandatory adoption of IFRS is in the public interest.

The new FERF Study, entitled, "International Financial Reporting Standards: A Project Plan for U.S. Companies," is the first in an information series FERF is publishing to provide practical professional education on IFRS. The report highlights current IFRS-related efforts of U.S. public companies in compliance with the multi-year Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers (Roadmap) released by the SEC in November 2008. The data was primarily compiled from a gathering of 30 U.S.-based public companies during which the discussion focused on challenges and best practices related to IFRS.

"The timing of the SEC's Roadmap will have a profound impact on the finance profession, and professionals will be closely watching to see how the economic crisis that had escalated subsequent to the IFRS session will affect the ultimate timeline," said Marie Hollein, President and CEO, Financial Executives International and FERF. "Our report not only provides a summary of what U.S. companies are doing to get ready for IFRS in advance of a final Roadmap, but the key concerns our community is facing - these need to be kept top of mind as the new SEC leadership makes decisions related to IFRS."

Roadmap Challenges and Top Concerns
The report revealed that early adoption of IFRS is unlikely for companies due to the current constraints in the proposed Roadmap. Project leaders meeting last fall noted that uncertainty on the outcome of the 2011 SEC evaluation, particularly the possibility of forgoing the adoption to IFRS and maintain its requirement to file under U.S. GAAP, was a key reason for their decision, considering the significant disincentive it provides for companies that choose to adopt early.

Key takeaways from the roundtable include:

• Challenges and issues for IFRS adoption in the U.S.:
  
• Ongoing convergence efforts and elimination of different country-specific versions of IFRS
  
• Uncertainty as to how many countries use full IFRS
  
• Impact of existing statutory reporting on the U.S. IFRS adoption
  
• Prohibition of Last-In-First-Out (LIFO) accounting
  
• Pension plan accounting differences and accounting for impairments.
  
• Companies are using or intend to use some form of external support for their IFRS work, such as external auditors, other accounting firms, professional financial staffing and consulting firms, and other non-accounting consulting firms.
  
• Companies are motivated by the actions of their peers when making IFRS decisions.
  
• Of the two early adoption proposals currently suggested by the SEC, "Proposal A" is most preferred by companies, primarily because the three-year comparative reconciliations required under "Proposal B" would further lengthen the conversion process.

IFRS: Getting Started
"Regardless of timing, IFRS will be a huge undertaking for companies, requiring years of planning and preparation," said Colleen Cunningham, Global Managing Director, Finance and Accounting for Resources Global Professionals. "While companies will need to be flexible and be ready to adjust quickly to any proposed changes, there are several standard guidelines that companies can follow in their preparation."

The Report outlines four initial steps in preparation for IFRS:

• Devise an overall strategy
  
• Determine the impact on the company
  
• Identify a project team and governance structure
  
• Develop a detailed IFRS game plan

The report includes a detailed summary of the SEC Roadmap, and helpful recommendations on what companies should consider in their IFRS preparation. The study is free to all FEI members. Non-members can purchase the survey report for $99.00 by visiting the FERF bookstore online at www.ferf.org/bookstore.

About FEI and FERF
Financial Executives International is the leading advocate for the views of corporate financial management. Its 15,000 members hold policy-making positions as chief financial officers, treasurers and controllers. FEI enhances member professional development through peer networking, career management services, conferences, teleconferences and publications. Members participate in the activities of 85 chapters, 74 in the U.S. and 11 in Canada. Visit www.financialexecutives.org for more information.

Financial Executives Research Foundation (FERF) is the non-profit 501 ^©(3) research affiliate of FEI. FERF researchers identify key financial issues and develop impartial, timely research reports to FEI members and non-members alike, in a variety of publication formats.

About Resources Global
Resources Global Professionals, the operating subsidiary of Resources Connection, Inc. (NASDAQ: RECN), is a multinational professional services firm that helps business leaders execute internal initiatives. Partnering with business leaders, we drive internal change across all parts of a global enterprise - finance and accounting, information management, internal audit, human capital, legal services and supply chain management. More information about Resources Global is available at http://www.resourcesglobal.com.

Media Contacts:
Nicole Madison (FD on behalf of FEI/FERF)
212-850-5647 / Nicole.Madison@fd.com

Jeff Bellows (for Resources Global Professionals)
617.897.0350/ jeff.bellows@resources-us.com