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Chief Accountant of the SEC believes former SEC Chairman's call for burying IFRS was 'premature'

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08 Jun 2015

At a financial reporting conference in California, Jim Schnurr, Chief Accountant of the US Securities and Exchange Commission (SEC) confirmed that the SEC does not intend to bury the objective of a single set of high-quality, globally accepted accounting standards.

As in a speech given last month at Baruch college, Mr Schnurr stated that his research to date has revealed that there is virtually no support to have the SEC mandate IFRS for all registrants, that there is little support for the SEC to provide an option allowing domestic companies to prepare their financial statements under IFRS, but that there is continued support for the objective of a single set of high-quality, globally accepted accounting standards. He therefore questioned former SEC Chairman Christopher Cox' comments at the same conference last year who had stated: "I come to bury IFRS, not to praise them". Given the continued support for convergence, Mr Schnurr commented that the real questions are: what is the path to achieve that objective and how do we get there? He opined:

In my opinion, in the near term, FASB and IASB should continue to focus on converging the standards. The boards should renew their commitment to cooperate and develop standards that eliminate differences between IFRS and U.S. GAAP whenever it meets the needs of its constituents and improves the quality of financial reporting. I recognize the boards will not always be able to eliminate differences during the standard-setting process, primarily because they serve different constituents that have different needs. However, when differences in standards arise, the boards should monitor the implementation of those standards with the objective of learning from the implementation and re-engaging with each other with the goal of converging to the standard with the highest quality financial reporting outcome.

Mr Schnurr also commented on revenue recognition and the new converged standards published in May 2014 and the work of the joint revenue transition resource group (TRG) which has led to proposed amendments to the FASB guidance in May and will see proposed IASB amendments in the third quarter of 2015.

The boards should apply the lessons learned from the recent revenue recognition standard and realize that even though the words may be the same, to achieve convergence, cooperation is needed after the standard-setting process is complete and during the implementation stage of the standards. [...] While the FASB and IASB approach to clarifying the guidance differs slightly, both boards, as evidenced by their discussions during their joint meeting, continue to believe they have a converged approach.

Please click to access the full text of Mr Schnurr's speech on the SEC website. All conference materials are available on the conference website.

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