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SEC chief accountant believes former SEC chairman's call for abandoning IFRSs was “premature”

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Jun 08, 2015

In a speech at the 34th annual SEC and Financial Reporting Institute Conference in Pasadena, California, SEC Chief Accountant Jim Schnurr confirmed that the Commission does not intend to abandon the objective of a single set of high-quality, globally accepted accounting standards.

As in his speech last month at Baruch college, Mr. Schnurr stated that his research to date has revealed that there is continued support for this objective even though there is virtually no support for the SEC to mandate IFRSs for all reg­is­trants and little support for the Commission to provide an option allowing domestic companies to prepare their financial state­ments under IFRSs. Mr. Schnurr therefore ques­tioned former SEC Chairman Christo­pher Cox's statement at the same conference last year: "I come to bury IFRS, not to praise them." Given the continued support for con­ver­gence, Mr. Schnurr noted that the real issue is how we achieve that objective. He noted:

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 cited the example of the FASB’s and IASB’s May 2014 converged revenue recog­ni­tion standard as well as the work of the boards’ joint revenue recognition tran­si­tion resource group (TRG). As a result of the TRG’s efforts, the FASB proposed amendments to the revenue standard in May (the IASB plans to do so in the third quarter of 2015). Mr. Schnurr noted:

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..

The full text of Mr. Schnurr’s speech is available on the SEC’s Web site. All con­fer­ence materials are available on the conference Web site.

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