SEC to say more on IFRS in the 'relatively near future'

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21 May, 2014

Mary Jo White, Chair of the United States Securities and Exchange Commission (SEC), has discussed the possible implementation of International Financial Reporting Standards (IFRS) in the United States. In a speech at the annual United States Financial Accounting Foundation Trustees dinner, Ms White noted calls for more information about when the SEC will provide more information on the incorporation of IFRS into US domestic capital markets, noting that she hopes to "be able to say more in the relatively near future".

In her speech, Ms White provided a brief history of IFRS in the Unites States, including permitting foreign private issuers to report using IFRS without a reconciliation to U.S. GAAP, and the 2012 SEC staff report about the possible incorporation of IFRS into the US financial reporting system.

In referencing speeches by previous SEC Chair Mary Schapiro and SEC Commissioner Elisse Walter, Ms White noted expressed sentiments about the importance of converged accounting standards in global capital markets, but also noted the following:

They also said three other important things: first, the interests of U.S. investors would remain front and center as the Commission considers IFRS; second, the FASB would remain front and center as the ultimate standard setter of accounting standards for U.S. companies; and third, the role the United States plays in the development of global standards must be an important consideration.

Whilst strongly agreeing with these sentiments, Ms White acknowledged increasing pressure from the SEC's international regulatory and accounting counterparts and others for more information about the SEC's intentions on the incorporation of IFRS into US domestic capital markets, saying:

The Commission last spoke on these questions in February 2010 when it said that: “…a single set of high-quality globally accepted accounting standards will benefit U.S. investors and that this goal is consistent with our mission…” That remains true today and I have made it a priority for the Commission to position itself to make a further statement on this very important subject, now that we have six years of experience working on the priority convergence projects with the IASB and over six years of experience with foreign private issuers filing IFRS-prepared financial statements without a U.S. GAAP reconciliation.

Ms White also focused on the importance of accounting standards in financial reporting and the work of the FASB. In discussing the convergence process with the International Accounting Standards Board (IASB), Ms White noted the imminent release of new standards on revenue recognition, and that the joint project "on one of our most fundamental and critical standards is a true success for both FASB and the IASB".

In a wide-ranging speech, Ms White also discussed the importance of the enforcement of accounting standards, the SEC's rule making priorities, and the SEC's disclosure effectiveness project which is "intended to make sure that investors are being well-served by the disclosures they receive" and that the SEC "will work with the FASB to identify ways to improve the effectiveness of disclosures in corporate financial statements and to minimize duplication with other existing disclosure requirements".

The full transcript of the speech can be found on the SEC's website.

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