SEC Bares Final Report on Work Plan for Global Accounting Standards

July 16, 2012 /

The Securities and Exchange Commission’s Office of the Chief Accountant has published its final staff report on the Work Plan related to global accounting standards.

The Work Plan, initiated in 2010, is intended to assist the SEC in determining whether and how to incorporate International Financial Reporting Standards (IFRSs) into the US financial reporting regime.

Commenting on the publication of the report, Michel Prada, Chairman of the Trustees said: “The Trustees note the publication of the final SEC staff report on the possible use of IFRSs within the United States. The report reiterates the many challenges that a large economy such as the United States faces when transitioning to IFRSs – challenges that other jurisdictions have successfully overcome when completing their own transition to IFRSs.

“The Trustees will carefully study the report in detail and take further steps as necessary. Our initial assessment is that many of the findings are broadly consistent with the conclusions of the Monitoring Board and Trustees’ respective Governance and Strategy Reviews completed earlier in the year, and are already addressed in the work plan for 2012.

“While recognising the right of the SEC to determine the method and timing for incorporation of IFRSs in the United States, we regret that the staff report is not accompanied by a recommended action plan for the SEC. Given the achievements of the convergence programme inspired by repeated calls of the G20 for global accounting standards, a clear action plan would be welcome.

“For the benefit of both US and international stakeholders, the Trustees look forward to the SEC resolving the continued uncertainty regarding the US’s commitment to global accounting standards.”

The SEC issued a statement at the time indicating that the information obtained through the Work Plan would aid the SEC in evaluating the implications of incorporating International Financial Reporting Standards (IFRS) into the financial reporting system for U.S. companies.

Hans Hoogervorst, Chairman of the IASB, said: “IFRSs have already achieved critical mass as international standards and with more than two thirds of the G20 now on board, the momentum behind them becoming global accounting standards is irreversible. We are confident in our mission to achieve a single set of high quality global accounting standards and we continue to work to serve investors and other users of IFRSs across the world.

“We are at a pivotal moment for our organisation. The IASB has started working on a new agenda. The era of convergence is coming to an end. We are revamping our institutional infrastructure to provide for a more inclusive approach to international standard setting. This is the right timing to come on board and participate in shaping the future of global accounting.”

Meanwhile, the American Institute of CPAs (AICPA) applauds the staff of the SEC “for its thoughtful analysis and the preparation of a comprehensive report regarding incorporation of International Financial Reporting Standards (IFRS) into the financial reporting system for U.S. public companies.”

The AICPA said it has long supported the goal of a single set of high quality, global financial reporting standards to be used by public companies in the preparation of transparent and comparable financial reports throughout the world. The AICPA believes that IFRS are best positioned to become those global standards.

Barry C. Melancon, AICPA president and CEO, said: “We applaud the SEC staff for its robust efforts to review IFRS and we urge the Commissioners to consider the staff report with expediency because the world’s capital markets know no borders. The participants in those markets need high quality, transparent, and comparable financial information to enable them to make sound investment decisions.

“We also urge the Commissioners to allow U.S. public companies the option to adopt IFRS.”

An adoption option would provide a level of consistency in the treatment of U.S. companies and foreign private issuers that report under IFRS that does not exist today, and would facilitate the comparison of U.S. companies that elect IFRS with their non-U.S. competitors that use IFRS.

The SEC staff welcomes feedback on the final staff report. Submissions to the Commission may be made either on paper or electronically.

Electronic submissions:

Use the SEC’s Internet comment form or send an e-mail to rule-comments@sec.gov.

Paper submissions:

Send paper submissions in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street N.E., Washington, D.C. 20549-1090.

All submissions should refer to File Number 4-600. This file number should be included on the subject line if e-mail is used. Please note that all submissions received will be made publicly available and posted on the SEC’s website.

 

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