Mandatory Phase-In Set in Motion
The SEC recently proposed a "roadmap" for phasing in mandatory International Financial Reporting Standards (IFRS) by U.S. public companies. The initial proposed mandate for this transition is scheduled to begin for certain filers for years ending on or after December 15, 2014. Does this mean the end of US GAAP, and what effect will this have on private companies?
No one at this point knows the answers to these critical questions. One thing is for certain: the transition from US GAAP to IFRS will be very costly and will require a tremendous amount of expertise in both areas, regardless of whether the company is a multinational publicly traded conglomerate or a privately held business.
Assuming that IFRS does in fact become GAAP for public companies in the future, it is logical that the same requirements, or a hybrid of the requirements, will follow for private companies. If so, every family-owned enterprise in America could potentially be affected by this transition.
Is this push for global uniform accounting standards going to be worth it considering the estimated time and costs involved to change, especially for family-owned enterprises? Only time will tell.