When I scan down the list of 200-plus IFRS road map comment letters on the SEC site, my eyes glom on to certain names and firms.

I want to know what the Big 4 (as well as Grant Thornton, McGladrey, BDO Seidman, and Crowe) think about the SEC’s proposed IFRS conversion timing.

I also want to know what highly influential finance individuals like Arnold Hanish, the vice president of finance and CAO of Eli Lilly and Company, think. (Hanish has been honored as a Business Finance Influencer in the past.)

Hanish submitted a four-page letter that contains several notable insights.

Hanish’s letter describes his company’s stance on IFRS as “support with concerns.” He agrees that the new standards will enhance comparability across exchanges, provide easier access by U.S. companies to foreign debt markets, and streamline financial reporting.

His primary concerns relate to the SEC’s decisiveness on a hard implementation date, conversion costs (and internal pain), and IFRS-GAAP reconciliation for companies that move to IFRS early (Proposal B).

The conversion would cost Eli Lilly $20 million to $30 million, according to Hanish – and that figure does not account for the “opportunity cost of having high-quality internal resources committed to an IFRS conversion compared to other value-added activities.” The heaviest lifting during conversion involves the changes that will need to be made to financial systems.

Hanish notes that his company opposes an “ongoing” IFRS-GAPP reconciliation for early adopters of IFRS because doing so eliminates any benefit of early adoption.

The first concern Hanish mentions is the current uncertainty surrounding a hard adoption date: Remove that uncertainty, he urges, because it will take large, global companies at least two years to prepare for conversion.

Finally, Hanish mentions an interesting wrinkle – one related to the principles-based nature of IFRS – that other finance executives should be aware of: “We believe there is a significant risk that audit firms will interpret IFRS and develop a preferential treatment, in effect setting the accounting guidance as opposed to allowing companies to set policies based on principles as was intended by the IASB. In discussions with our consultants on IFRS, we have begun to see this in practice where audit firms with a minority view often reconsider this view in light of the majority’s view. This behavior undercuts the intent of IFRS and leads us away from a principles-based approach.” (The boldface is mine.)

More comments on IFRS comments to come … ###