In her remarks at the Financial Accounting Foundation Trustees dinner earlier this week the US Securities and Exchange Commission (SEC) chair Mary Jo White performed a balancing act over IFRS adoption in the US.
While she hinted at further debate on IFRS adoption, she reiterated the unshakable authority of the US standard-setting bodies and the role of the US in international standard-setting.
White’s remark was designed to highlight some of the SEC’s projects with regards to standard-setting, and she dedicated a section of her speech to the adoption of IFRS in the US.
She reminded her audience that since 2007 the SEC has permitted foreign private issuers to report under IFRS without requiring reconciliation to US GAAP. But she admitted that the question of IFRS adoption for domestic issuers was still pending.
"Considering whether to further incorporate IFRS into the US financial reporting system has been a priority for me. And, it continues to be," White said before quoting previous SEC chair Mary Schapiro and SEC commissioner Elisse Walter.
Schapiro and Walter had expressed the importance of international standards for investors in the global market and the SEC’s commitment to work towards convergence. But White reminded that Schapiro and Walter had also set three important considerations for the debate on IFRS convergence/adoption.
First, the US investors’ interests should remain the SEC first priority. Second, the Financial Accounting Standard Board (FASB) should remain the ultimate standard setter for US companies. And third, the role played by the US in the development of global standards shouldn’t be undermined.
"I strongly agree with these sentiments," White said before acknowledging increased pressure from the SEC’s international regulatory and accounting counterparts for more information about the SEC’s position with regards to IFRS adoption into the USA domestic capital markets.
White said she had made it a priority for the SEC "to position itself to make a further statement on this very important subject".
Particularly now that the SEC had six years of experience working on convergence projects with the International Accounting Standard Board (IASB) and with foreign private issuers filing IFRS-prepared financial statements without US GAAP reconciliation, she said.
Not an answer yet
Nevertheless White closed her remarks on this particular topic by saying: "I cannot answer these questions tonight – while we continue to consider the issue. But they are important to answer and I hope to be able to say more in the relatively near future."
This is not news from the SEC. In April 2013 The Accountant reported that the expectation was that the SEC would keep endorsing standards but without set deadlines.
Interviewed for this magazine’s World Survey, the International Federation of Accountant president Warren Allen said: "We’re probably further away now than we have ever been in terms of getting the US to adopt IFRS, politically the US doesn’t appear as if it’s going to do that. So, we need to push for convergence. We’ll continually push for adoption, but the second-best option is that the standards of the two are converged."
The majority of US accountants support optional adoption of IFRS, according to a survey by the American Institute of Certified Public Accountants (AICPA) in 2011.
AICPA vice-president firm services & global alliances Mark Koziel told TA during the AICPA European Summit in Frankfurt earlier this month: "The US will most certainly not converge to IFRS anytime soon and this is a challenge for us and our clients: not having convergence results in confusion in the market, and that can never be beneficial."
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Mary Jo White remarks at the Financial Accounting Foundation Trustees Dinner