Securities regulators on Wednesday delayed plans to allow domestic companies to use international accounting standards because it will take businesses at least four years to switch to new rules.
The soonest companies could start using the International Financial Reporting Standards, or IFRS, would be in 2015 instead of 2014, but even that date is not certain.
The Securities and Exchange Commission is grappling with how to move to one set of high-quality, globally accepted accounting standards.
Under the previous plan, the SEC would have allowed U.S. companies to use the international rules as early as 2014. But industry and investors told the SEC that U.S. companies would need about four to five years to implement the changes successfully, thus pushing the date out to 2015.
A host of issues remain, such as whether the international rules are sufficiently developed, whether the United States is prepared to convert to IFRS and ensuring that the international rules are set by an independent standard setter.
We do not have all the information necessary to make these decisions today, said SEC Chairman Mary Schapiro at a public agency meeting.
Next year, the SEC will decide whether to incorporate IFRS into the financial reporting system. The agency will only proceed if it is satisfied that progress is being made on issues such as improving IFRS.
The U.S. audit and business community said it was pleased that the SEC reiterated support for a single set of high-quality global accounting standards. However, the vagueness of the plan frustrated some foreign accountants.
The current cautious approach does not offer the much-needed certainty required by U.S. companies and the many jurisdictions still in the process of making final decisions about switching to IFRS reporting, said the Institute of Chartered Accountants in England and Wales.
U.S. companies are required to use U.S. Generally Accepted Accounting Principles, or U.S. GAAP, which are considered more prescriptive than the international rules.
Meanwhile, the rest of the world is adopting the international standards, which could potentially leave the United States and global companies at a disadvantage if they have to comply with two sets of rules.
Financial centers such as Hong Kong and the European Union already require international accounting rules.
(Reporting by Rachelle Younglai; Editing by Andre Grenon and Steve Orlofsky)