It Could Cost $32 Million for an Early Switchover To IFRS Accounting

(MoneyWatch)  It could cost up to $32 million for a U.S. company to switch over to a new international accounting system if it chooses to be one of the first to do so, accorsing to a report by the U.S. Securities & Exchange Commission.
About 110 companies could be in position to switch over to the International Financial Reporting Standards (IFRS) starting next year. All publicly-traded U.S. firms could be required to shift to IFRS within six years if the SEC votes in 2011 to push ahead with the plan.

SEC officials predict that switching over to IFRS from U.S. Generally Accepted Accounting Principles now in use could cost from 0.125 percent to 0.13 percent of a company's revenues. About 110 firms are considered potential early adapters and could start using IFRS in their finanical reports when they file in 2010. That would mean that they would have to start their switch-overs next year.

The SEC has put out a proposed "roadmap" for the timing of the potential switch in accounting systems. Comments on the roadmap are due by this February.

SEC Chairman Christopher Cox has been a major advocate of IFRS, noting that just about all countries use it, except for firms in the U.S. Skeptics, however, have noted that Cox, who will leave his post in February, has taken a slower approach to IFRS adoption.
The original roadmap, they note, was due in August but wasn't published until November. Cox's specches on the topic have become noticeably briefer.

If the SEC wavers on IFRS, U.S. firms could be put in a crunch. Some companies, such as General Motors, have said that his firm won't be switching to IFRS until it has to do so. One reason is that the giant automaker is teetering near bankruptcy and is asking for billions in federal bailout money. Poneying up $32 million for switching its accounting system may not seem like a high priority at the moment.

IFRS is said to be simpler and more principles based than U.S. GAAP.