Waiting on the SEC.

In a recent speech at the American Accounting Association annual meeting, Sir David Tweedie, chairman of the International Accounting Standards Board, asked, "Where is the USA?". He warned that if a commitment to IFRS does not come from the U.S. by 2011, he thinks it will be impossible to continue convergence efforts with the U.S. after that date. The IASB is also under pressure from the Federation of European Accountants to end the convergence program with the U.S.

The leaders of the G-20 nations earlier this year called for substantial progress toward a single set of global standards. President Obama reiterated this position in his regulatory reform proposals in June. Officials in the U.S. and Europe do not seem to be listening. In Europe, the EU Commissioner for the Internal Market and Services is reported to have not signed a key document, which supports the Monitoring Board of regulators that oversees the IASB's parent, the IASC Foundation. Pressure from both European and U.S. politicians have the FASB and IASB heading in different directions on fair value reforms, at least in terms of timing of forthcoming proposals.

The SEC, however, holds the key to the G-20's and President Obama's call for one set of global standards. Without the world's largest capital market – the U.S. – there are no global standards for public companies. Delay in SEC action on its roadmap for the adoption of IFRS is having a serious affect on the global convergence movement.

In their comment letter to the SEC, the U.S. Financial Accounting Foundation and FASB supported a call for a comprehensive study by the Office of Chief Accountant on the implications of implementing IFRS in the U.S. Given the size and complexity of our economy and capital markets, this is a logical next step. Now that the SEC has named its chief accountant, it is a good time to start the study, or at least let us know what the next step in the process is going to be.

What do you think will happen next? Do you think ultimately the SEC will move to adopt IFRS?

- Paul Parks | www.IFRS.com

Comments

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It is neither robust nor common. We have seen that the IFRS standard setters are very much influenced by political events, and that each country takes its own approach. Until IFRS is truly independent and consistent from country to country, I believe the SEC will have trouble accepting it as the standard.

[aion kinah]

I think it makes good sense to continue to push on convergence, so that the two sets of standards converge into one, rather than the U.S. switching to IFRS prior to the substantive completion of convergence.

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Great tips, thanks for sharing.

[Bob Richter]

Reasons for the SEC not moving this along are well indicated in a speech given by PCAOB board member Charles Niemeier on September 10, 2008.

http://www.pcaobus.org/news_and_events/events/2008/speech/09-10_niemeier.pdf

[Joe Jefferis]

Mandating IFRS is a radical proposal.

[www.facebook.com/profile.php?id=1421073595]

For the last several years the FASB and IASB have proceded with a vigorous convergence program. I think it makes good sense to continue to push on convergence, so that the two sets of standards converge into one, rather than the U.S. switching to IFRS prior to the substantive completion of convergence. Sir Tweedy says that convergence cannot proceed without the SEC establishing a timetable for switching U.S. GAAP to IFRS. Why? The two issues are independent.

[John MacDonald]

IFRS is touted as a robust set of common standards that is the same in every country. It is neither robust nor common. We have seen that the IFRS standard setters are very much influenced by political events, and that each country takes its own approach. Until IFRS is truly independent and consistent from country to country, I believe the SEC will have trouble accepting it as the standard.