US GAAP: A Foreseeable Death

For approximately two decades, the SEC and Financial Accounting Standards Board (“FASB”) have been diligently working with their respective counterparts abroad to converge U.S. generally accepted accounting principles (U.S. GAAP) with the generally accepted accounting principles of other first-world countries.  This ongoing sovereignty -surrendering, give and take exercise currently targets substantial convergence by 2009.  The SEC has increasingly made it known for years, under both Democratic and Republican administrations, that upon reaching substantial convergence, if not somewhat before, that it will progressively eliminate the current requirement that foreign private issuers provide detailed footnote disclosures reconciling any material differences with U.S. GAAP…thus, the “political carrot.” 

With respect to the question posed by this article as to whether U.S. public companies will be allowed to continue to report under U.S. GAAP subsequent to substantial convergence with IFRS, again targeted for on or before 2009, I believe that U.S. GAAP will remain a reporting option but only for a period of time sufficient for the regulatory, investing and academic communities to become more comfortable with IFRS.  However, time is of the essence for these communities as I believe that the SEC views us as being well into the transitional period.  Furthermore, I believe that the SEC, regardless of the political persuasions of the then President and SEC Chairman, will continue to aggressively push such transition so as to ultimately mandate IFRS for all U.S. listed companies, foreign and domestic.  Thus, the death of U.S. GAAP is foreseeable!