Full U.S. adoption of International Financial Reporting Standards (IFRS) appears unlikely to occur in the intermediate-term as the major accounting standard setters continue to move away from full convergence of their standards, according to a Fitch Ratings report.

Three joint, or former joint, FASB/IASB projects remain outstanding; financial instruments, insurance, and lease contracts. Differences in financial products between U.S. institutions and those following IFRS, as well as differences in application meant that a one-size-fits-all accounting approach for financial instruments was problematic. Furthermore, on the insurance front there were a number of concerns raised by U.S. constituents, including that the proposal would ensnare both insurance and non-insuring issuers. These considerations resulted in the joint insurance project also falling by the wayside.

Discussions remain on track over a joint FASB/IASB standard for lease contracts. However, some detailed issues remain to resolve and there may be some minor differences in application between the final IFRS and U.S. GAAP standards.

Nevertheless, the two standard setters recently marked successful completion of their joint project on revenue recognition. The new revenue standard was issued in May 2014 and is nearly identical to a new IFRS standard, IFRS 15 issued on the same date. U.S. public companies using GAAP will be required to apply the standard for annual reporting periods beginning after Dec. 15, 2016 with private companies after Dec. 15, 2017. The revenue standard should not affect overall contract profitability.

For many companies, the new rules will affect the timing of revenue, and Fitch believes this has the potential of making margins less consistent over time due to sales deleverage. Transition to the new rules may provide an opportunity for companies to scrutinize their contracts. Changes to terms and conditions may then be considered to optimize revenue under the new rules or remove redundant conditions.

In the interim, accounting updates during 2013 were mostly clean-ups of previous pronouncements or updates. As such, they are likely to have minimal impact to corporate credit metrics and cash flows.