I’ve emphasized the role of jurisdiction on US adoption of IFRS often. I believe it’s the single most important element for determining when and if adoption occurs. Thereafter, it will dictate the pace and breadth of success of IFRS as a global standard.

Through long experience interpreting and applying US GAAP as a member of the SEC’s staff and then on the other side arguing positions for clients to the staff, I’ve developed a broad understanding for how rules are constructed, interpreted and applied by the institution. It understands itself as the last word in financial reporting for public companies.

There are very specific paths to take and methodologies for presenting them if you want to win the SEC’s support for your GAAP position and how to report it. They have set the ground rules for decades and when they do not agree with an enterprise’s arguments, the door to a reporting treatment closes.

In the face of that history, the staff understands once IFRS is adopted and the IASB becomes the standard setting institution, its own authority and influence may be diluted. It means a changed landscape for the agency that has been the principal force behind public financial reporting policy in the US. The following is their views on jurisdiction, change and the inherent obstacles to consistency, from their roadmap.

The IASB is expected to be responsive to broad, world-wide constituencies of investors, issuers, regulators and many others in all facets of its work, including the establishment of its agenda and the development of standards. These constituencies can be expected to represent a wide-range of interests, reflecting varying economic, social and political environments.

These factors likely would mean that the interaction, and potentially the relevance and influence, of U.S. capital market participants, including the Commission and its staff, would be reduced compared to the current standard setting process in the United States. (p. 46)

…constituents involved in the IFRS standard setting process may come from different financial reporting environments and may have objectives that are different from or not present in the standard setting process for U.S. GAAP. (p. 47)

In addition, individual jurisdictions’ processes for incorporating IFRS into their markets may result in varying degrees of pressure placed on the IASB in the development of individual standards. For example, some jurisdictions adopt or endorse IFRS on a standard-by-standard basis unlike the historical approach in the United States to look to a standard setter to establish the body of accounting standards as a whole.

Further, the IASB’s need to consider a greater number of constituents in seeking consensus on a new or revised standard, and the associated need to consider multiple jurisdictions in scheduling implementation, could lead to a longer deliberative process in issuing accounting standards.

Further, individual jurisdictions, through their securities regulators, accounting standard setters or other bodies, could adopt or provide for interpretations or applications of IFRS for companies in those jurisdictions which are different from those in other jurisdictions. (p 47)