SEC Reaffirms Its Commitment to IFRS
While noting that incorporating IFRS into the US financial reporting system would involve a significant undertaking, SEC Chair Mary Schapiro reaffirmed the Commission’s support for a single set of global accounting standards. She added that the SEC will carefully consider and deliberate whether such a change is in the best interest of U.S. investors and markets. And, if the Commission decides that such a change best serves these interests, it will provide for a sufficient transition time for those who prepare financial statements and those who use them.
Before the adoption of a global accounting standard, she noted, the convergence projects currently underway between the FASB and the IASB must be successfully completed. Moreover, SEC staff must gather information to aid the Commission as it evaluates the impact that the use of IFRS by U.S. companies would have on our securities market. To this end, the staff has been asked to develop and execute a work plan.
In 2011, upon the conclusion of the fact-gathering and analysis set forth in the work plan, and assuming completion of the convergence projects, the Commission will then be in a position to determine whether to incorporate IFRS into the financial reporting system for U.S. public companies. Until that time, the SEC expects the staff to provide periodic written public reports to the Commission on the progress of its efforts
The Center for Audit Quality praised the SEC for reiterating its support for a single set of high-quality global accounting standards, consistent with comments from the vast majority of investors and other stakeholders who reacted to the Commission’s earlier Roadmap. The Center is similarly pleased that the SEC has expressed its support for IFRS as that single set of high-quality standards.
According to CAQ, the SEC’s action, in conjunction with the staff’s forthcoming work plan, should provide a path forward to the incorporation of IFRS into the financial reporting system for U.S. issuers. CAQ encouraged the Commission to execute its action plan so it is in a position next year to make a positive decision to adopt IFRS.
IFRS is quickly becoming the international standard, with 110 countries having already adopted, or in the process of adopting, IFRS. A few years ago, in an effort to promote the global consistency of financial accounting standards, the SEC e liminated the requirement that foreign private issuers reconcile their IFRS-driven finnacial statements to US GAAP.
In a recent letter to the G-20, a joint FASB-IASB expert group said that it remains critically important to produce a single set of high quality, globally converged financial reporting standards that provide consistent, unbiased, transparent and relevant information across geographical boundaries. The Financial Crisis Advisory Group expects the standard setting process to continue in a spirit of independence and accountability. The G-20 has consistently called for convergence towards a single set of high-quality, global, independent accounting standards. The Financial Crisis Advisory Group is co-chaired by former SEC Commissioner Harvey Goldschmid and Hans Hoogervorst, Chairman of the Netherlands Authority for the Financial Markets.