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SEC Chief Accountant comments on IAS

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17 Aug 2001

Lynn Turner made his final speech as Chief Accountant of the US SEC at the annual meeting of the American Accounting Association in Atlanta, Georgia on 13 August.

Comments relating to IAS included these:
  • Regarding possible changes to the existing requirement that IAS registrants reconcile IAS earnings to US GAAP, Mr. Turner said: "I don't see a lot happening there.... Investors need to have information on an 'apples-to-apples' basis. We should do nothing at this point in time."
  • The SEC has sent a letter to IASB asking IASB to add revenue recognition to its agenda. IASB Chairman Sir David Tweedie has replied that he would present the request to the IASB at its next meeting.
  • The SEC has prepared an analysis of reconciling items in IAS filings and has sent it to IASB.
  • Mr. Turner expressed concern about a letter written to IASB by a major Swiss multinational corporation stating that if the IASB adopts a standard that is more rigorous than a US standard, for example, in the area of business combinations or stock option accounting, then the company would propose to abandon IAS and switch to US GAAP. Commenting further on this letter in another presentation at the same meeting, Mr. Turner said:

I find this disappointing as it means that there are some out there who believe we should have standards based on the lowest common denominator (or some would say based on what gives them the answer they most desire) rather than international standards that are the 'best of breed'. However, I am not surprised. I always wondered if some of those advocating the use of international standards failed to recognize and give appropriate credit to the fact that we in the US have the world's largest, most liquid capital markets because we do in fact have the 'best of breed' financial reporting today. This in turn has provided companies with capital at the lowest possible cost that has been used to generate jobs and an improved global economy.

But ultimately, it will be the market that determines whose product works the best. I hope the IASB avoids the race to the 'bottom' with its product, as some have recommended. I also hope that those people whose foresight seems myopic and shortsighted, who believe that no standard should be any 'tougher' or more rigorous than what we establish in the US, realize they are really saying, 'Let's be done with the IASB now that it appears they are going to develop higher quality standards, and just look to the FASB for standard setting.'

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