The Securities and Exchange Commission is finally getting closer to deciding how International Financial Reporting Standards could be incorporated into U.S. accounting and regulatory rules.

The standards, drafted by the International Accounting Standards Board, aim to more clearly standardize accounting rules around the globe.

So far, there has been no overwhelming rush around the world to switch to the international standards. In the U.S., too, a survey of certified public accountants by the American Institute of Certified Public Accountants in May suggested that most CPAs are delaying efforts to move to the new standards. Everyone seems to be waiting for the decision from the SEC, which has been looking at the standards for several years. Recently, it increased its scrutiny.

In February 2010 the agency issued a statement of support for a global system of accounting standards and followed that in May 2011 with a paper reviewing how IFRS might be incorporated in the United States. The paper suggested that IFRS guidelines wouldn't totally replace generally accepted accounting principles, or GAAP, but rather would supplement them. The SEC followed up July 7 with an all-day workshop that asked a number of questions about potential impacts.

Nevertheless, SEC Chairwoman Mary Schapiro is indicating that no final decision has yet been reached on whether to adopt IFRS. "The issue and the decision about potentially incorporating IFRS into the U.S. reporting regime is a major decision for this agency and one not to be taken lightly," she said at the workshop.

"Our decision making will be guided by investors' needs. Our primary focus will be to ensure that investors have the information that they need in a form that is helpful to them to make decisions about the allocations of their capital, but we are also mindful of the cost, and we want to make sure that if we go in this direction, we have a transition that makes sense and is realistic and rational."

According to an analysis by PricewaterhouseCoopers, a move from GAAP to IFRS could affect accounting for warranties, revenues and customer loyalty programs; effective tax rates; and even a company's capital needs. The accounting firm suggested that debt covenants specifying a required debt-to-equity ratio and compensation agreements might be affected by the accounting changes, as well as how companies list the value of derivatives contracts.

PricewaterhouseCoopers pointed to differences in how GAAP and IFRS recognize revenues. While GAAP can force delayed recognition of revenues from a partly built or partly completed project, IFRS takes a broader view, for instance allowing the use of percentage completion for service contracts.

IFRS, however, could be tougher than GAAP on accounting for warranty obligations and customer loyalty programs.

U.S. regulators and the industry have two concerns. One is that replacing U.S. GAAP with international guidelines while promoting standardization could cede the SEC's standard-­setting role, hurt U.S. investors and create confusion in year-to-year comparisons of financial statements.

The second is how standardized International Financial Reporting Standards will really be. There have been complaints some countries that have already adopted IFRS have carved out significant exceptions to standardization.

"Like the beauty pageant contestant hoping for 'world peace and harmony,' support of a good idea is one thing, making it happen is quite another," Gaylen Hansen, a partner at Denver-based law firm Ehrhardt Keefe Steiner & Hottman PC and director at large of the National Association of State Boards of Accountancy, told the SEC. "To date, the case has NOT been made for IFRS. The original dream of comparability seems to have taken a back seat to the real agenda of some promoters -- to get to IFRS at any cost and to pacify our friends abroad."

He suggested that the SEC's plan to endorse both standards "will cause confusion and loss of investor confidence" rather than be helpful because of different IFRS versions.

There are also some concerns that the SEC's ignoring IFRS could be risky as well. "The U.S. going its own way would greatly reduce its influence in IFRS' development," Gregory Jonas, a managing director of Morgan Stanley's equity research group, told the SEC forum. "To stay in the IFRS endeavor, we need to commit to the IFRS endeavor. Building a moat around U.S. investors undermines them."

Gerald I. White, president of Grace & White Inc., investment counsel, speaking at a CFA Institute Webinar in June, said there remain a lot of questions about IFRS. "The holy grail for all financial analysis is to have all companies using the standards," he said. "The question is how do we get there and what is the cost."

See the complete archive of Rules of the Road

Ira Teinowitz covers financial regulations for The Deal magazine.