A recently released survey by PwC finds companies bracing for major changes in financial reporting with $1.2 trillion in gross lease obligations estimated to be affected. The survey notes that 80% expect IFRS to be adopted in the U.S.

Of the joint projects being undertaken by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) to converge accounting standards between US GAAP and IFRS, leasing, revenue recognition and financial instruments are expected to have the biggest impact on businesses.

The results of a survey released by PwC affirm that each of these standards is expected to have broad impacts on companies, regardless of industry, size and whether the company is public or private. According to respondents, the changes to leasing are expected to have the most significant impact of the three, and also take the longest amount of time to implement.

Systems, for example, are expected to need substantial updates to accommodate convergence-driven change. With leasing, where the new rules are expected to affect an estimated $1.2 trillion in gross lease obligations, more than 60% of respondents currently use spreadsheets to track their leases. This is likely to prove insufficient under the new standard, given that all leases will need to be recorded on the balance sheet.

Convergence is broadly expected to give way to IFRS adoption in the U.S., with 80% of respondents believing that IFRS will be adopted in the U.S. in or after 2015, and only 13% believing that IFRS will not be adopted at all.

“U.S. financial reporting will undergo an unprecedented level of change within the next several years, and companies can minimize disruption by starting now to raise organizational awareness and evaluate the impact convergence will have,” said James Kaiser, U.S. GAAP convergence and IFRS leader for PwC. “The impact of convergence on businesses goes well beyond just accounting and reporting,” Kaiser added.

To link to full text of PwC news release click here.