By Jacquelyn Lumb
As her time as SEC chair nears an end, Mary Jo White issued a statement urging her successor, together with a full Commission, to continue to advance the objective of high quality globally accepted accounting standards. While U.S. constituents do not support either the adoption or the option of using international financial reporting standards at this time, White said it does not lessen the importance of their engagement on IFRS or the broader efforts to enhance globally accepted standards. She urged the next chair and Commission to build on past efforts and to give the goals of high quality globally accepted accounting standards the attention this critical issue deserves.
White noted that she has strongly encouraged engagement on this issue during her term as SEC chair and early on ordered a broad review by the Office of the Chief Accountant. U.S. investors make investment decisions based on the financial statements of foreign companies that use IFRS, she said. While U.S. companies use U.S. GAAP, it is not to the exclusion of IFRS since they make acquisitions and enter into joint ventures in reliance on IFRS information. In addition, multinational companies often are required to use IFRS for their reporting with respect to their foreign subsidiaries.
Although FASB and the IASB have completed their high priority convergence projects, White said their progress must continue. Their continued engagement opens the door to what she referred to as a sequential approach, which can result in convergence over time as the two boards evaluate each other’s independently adopted standards.
While U.S. GAAP and IFRS will continue to coexist for the foreseeable future, White emphasized the importance of continuing to narrow the differences between the two. She said the pursuit of high quality globally accepted accounting standards is part of the SEC’s continuing responsibility to encourage, facilitate, and direct efforts to enhance the quality of all financial reporting that affects investor protection and strengthens the markets.