NEW YORK–A myriad number of questions surround how insurers and other businesses will go about implementing the upcoming shift to international accounting standards, according to a briefing delivered here.

And some action may be required as early as 2010 in what could be a costly process for companies, according to a presentation here by Lisa Filomia-Atkas, an Ernst & Young partner for financial services in New York.

In her talk she offered ways that companies should begin to prepare for international accounting changes that are expected to become requirements later this summer when the U.S. Securities and Exchange Commission announces guidelines and deadlines.

Ms. Filomia-Atkas said the “SEC Roadmap” is expected to include a date by which U.S. companies will be required to move to International Financial Reporting Standards.

The period for implementation, she said, is anticipated to be around 2013 with public companies in the U.S. given the option to implement as early as 2011.

Since two years of balance sheets may be required for comparison purposes, companies may need to begin submitting IFRS-compliant financials starting in 2010, she added.

However, according to Ms. Filomia-Atkas, when foreign filers were required to file with the SEC, the Washington-based regulatory body only required one year of comparative information, so there might be some leniency.

Even as the industry awaits direction from the SEC, questions remain such as whether nonpublic companies will be impacted and, if they are, whether public companies will be required to comply with new international accounting standards first, followed by nonpublic entities.

Unclear at this point, said Ms. Filomia-Atkas, is whether the Financial Accounting Standards Board, Norwalk, Conn., will end operations or become part of another global entity governing accounting, once companies shift to standards governed by the International Accounting Standards Board, London, and abandon U.S. GAAP accounting.

Ms. Filomia-Atkas said some companies are already starting an impact assessment and many firms will begin approaching their boards this fall both to inform them of the need to take action and to establish governance structures.

They will also be asking directors for funding to create the accounting systems necessary to prepare for the new accounting standards that may be implemented.

There are steps that companies should begin to undertake, Ms. Filomia-Atkas said. These include doing a cost benefit analysis of a new system. The cost of preparing accounting systems could be greater than the cost companies recently experienced to comply with the financial accounting disclosure requirements of the Sarbanes-Oxley Act, she noted.

And, because of SOX, she added, the change in processes will need to be done in “a well controlled manner.”

Among points that companies will need to look at, Ms. Filomia-Atkas said, are changes to accounting systems, disclosure changes, new accounting policies, and tax and regulatory decisions.

Companies will need to decide whether to use spreadsheets or to imbed changes to reflect international financial reporting standards in the technology used in accounting systems, she added.

And, the impact of these changes will go beyond accounting and affect all parts of a company's business, she said.

For instance, if a firm has debt covenants in place, it might be necessary to get waivers on some of the provisions of those covenants if earnings are more volatile or there are accounting changes to debt and off-balance sheet items, Ms. Filomia-Atkas explained.

Items such as taxable income could also change, she noted. For instance, if there is a major impact on taxable income, the Internal Revenue Service may be required to consent to some of the accounting treatments that a company chooses. And, it could affect tax areas such as tax repatriation and interest deductibility.

Ms. Filomia-Atkas' remarks parallel comments made by Douglas Barnert, executive director of the Group of North American Insurance Enterprises, New York, when he explained to state insurance legislators that since March of this year, the idea of “convergence” of U.S. and international accounting standards is now being discussed as “replacement” and the concept of “if” these changes are made has been replaced with the notion of “when.”

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