The SEC IFRS roadmap recognizes that managing difference would play a substantial part in US adoption of IFRS. There would be significant effects on a public reporting organization’s daily operating structure. The system-based capture, sorting and presentation of financial information for internal management purposes and external investors would transition to IFRS outputs.

Use of any new accounting standards requires changes to financial reporting systems and procedures to identify, collect, analyze and report financial information and the corresponding controls. Changing numerous accounting standards at the same time, regardless of the starting point, would require numerous changes in a company’s policies and procedures and system of internal controls. (p. 39)

Having implemented accounting system changes, I can testify to the onerous amounts of tedious testing and staff hours that are required just to change the reporting software system. Add to this a transition in the fundamental rules for reporting the information and a broad industry education program to assimilate practicing professionals to how those rules are to be interpreted and applied, it is clear that a substantial effort looms.

As discussed in the 2007 Concept Release, IFRS is not as developed as U.S. GAAP in certain areas. IFRS also is not as prescriptive as U.S. GAAP in certain areas and in certain areas permits a greater amount of options than in U.S. GAAP. The smaller volume of IFRS literature as compared to U.S. GAAP may decrease the amount of authoritative guidance available in a particular circumstance.

This relatively lesser amount of guidance and, in some cases, greater optionality in IFRS could reduce comparability of reported financial information, as different issuers may account or provide disclosure for similar transactions or events in different ways but this flexibility also allows a financial statement that may more closely reflect the economics of transactions. (p. 45)

The opportunity to implement a uniform set of global reporting standards that leads to financial reporting based on the genuine underlying economics of business transactions is the most substantial reason for the US to adopt IFRS. It is also the primary reason it can struggle.

…less prescriptive guidance may increase issuers’ ability to account for transactions or events in accordance with their underlying economics, which could improve comparability of economically similar situations and highlight differences in dissimilar situations. (p.44)

The inevitable “choose the outcome you like” circumstance will be omnipotent early in the adoption cycle. The absence of prescriptive guidance leaves the organizations to their own means for diagramming the economic framework their reporting is intended to represent.

In the US and globally, less of the matrix solution model and more options equals interpretive differences. At this juncture, the real convergence would be addressed, as individual jurisdictions opt to join together and create a consistent interpretive model or fray and recreate what currently exists globally.