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The Bruce Column — Back on the SEC's agenda

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May 23, 2014

Mary Jo White, Chair of the SEC, has put IFRSs back on the U.S. agenda in a speech to FASB’s oversight body. Our regular resident columnist Robert Bruce reports.

We are on the verge of the publication of the new standard on revenue recognition, a joint project between the global standard setter, the IASB, and the U.S. standard setter, the FASB. And it has been praised by the chair of the main U.S. regulator, the SEC. Mary Jo White has said that "this project on one of our most fundamental and critical standards is a true success for both [the] FASB and the IASB."

Ms. White was speaking the other evening at the annual dinner of the Financial Accounting Foundation Trustees, FASB’s oversight body. She talked of the position of International Financial Reporting Standards, (IFRSs), in the United States. She recalled that for the past seven years foreign private issuers have been able to report under IFRSs without the need to reconcile to U.S. GAAP. "Today," she said, "over 500 companies representing trillions of dollars in aggregate market capitalization report to us under IFRS with no reconciliation. And the SEC staff enforces those standards." Her conclusion was clear. "By any measure," she said, "we have thus demonstrated a major commitment to the use of IFRS in our markets."

She then turned to the question of domestic issuers. "Considering whether to further incorporate IFRS into the U.S. financial reporting system has also been a priority to me," she said. "And it continues to be."

Ms. White referred to previous SEC pronouncements on the issue, and said the SEC was being pressed to answer other questions by "our international regulatory and accounting counterparts." They wanted to know whether and, if so, when and how the United States and the SEC is going to incorporate or otherwise speak again "to the issue of further incorporation of IFRS into the U.S. domestic capital markets." She referred back to the SEC’s last thoughts on the subject. In February 2010 it had said that "a single set of high-quality globally accepted accounting standards will benefit U.S. investors and that goal is consistent with our mission."

"That," she said, "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."

The questions, she said, "are important to answer and I hope to be able to say more in the relatively near future." And in the meantime, there is the publication of a converged revenue recognition standard to look forward to next week.

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