IFRS may lead to new U.S. accounting divide

By Emily Chasan

NEW YORK (Reuters) - In the debate over whether U.S. companies should adopt international accounting standards the question is no longer if, but when and how.

But the path to dropping U.S. Generally Accepted Accounting Principles (GAAP) and joining more than 100 other countries that use, or plan to use, International Financial Reporting Standards (IFRS) is likely long and strewn with obstacles, and could potentially divide corporate America.

Accounting rule makers have been working for years to merge U.S. and international standards, but a total switch to international rules could take a decade of work as differences wait to get resolved, regulators say.

"There is realistically going to be a long period of convergence," SEC Commissioner Paul Atkins told the Reuters Regulation Summit in Washington last week. "The IFRS literature is relatively sparse, and where they have gaps they look over to U.S. GAAP."

While IFRS has been touted as a simpler, more-principled approach to accounting, some worry it has not been tested like the century-old U.S. accounting rules.

Still, the push for U.S. companies to adopt international rules has intensified since U.S. regulators allowed foreign U.S.-listed companies to file results only in IFRS last year.

The move was seen as a way to keep foreign firms happy with U.S. markets, but some U.S. companies, particularly large multinational corporations, complained the switch created an unfair playing field.

So last week, SEC Chairman Christopher Cox announced plans to lay out a roadmap, with a specific schedule and milestones, for the general acceptance of the IFRS in the United States.