In the pages that follow I explain why I believe the movement towards use of a single set of globally accepted accounting standards is good for the global capital markets, and for investors and creditors (collectively, investors). I also discuss what I believe this movement means for the US capital markets and, in response to a question I am frequently asked, I attempt to set out a possible roadmap to elimination of the SEC's requirement that foreign private issuers reconcile financial statements prepared under IFRSs to US GAAP. Further, I describe factors that I believe can contribute to successful implementation and to increasingly widespread acceptance and use of IFRSs, or which, if not addressed, could impede progress. Lastly, I express my view that to maximize the benefits from a common set of accounting standards – IFRSs – the many involved parties need to work together on interpretive matters that arise in applying it.

I very much welcome the constructive approach the SEC is taking to moving these critical issues forward. We will work closely together to promote the closer alignment of IFRS and US GAAP and towards the elimination of US GAAP reconciliation requirements for foreign private issuers. These are major steps towards high-quality global accounting standards, which the European Union strongly supports. Clearly there is much to do all round, but the bandwagon has now started. International accounting standard setters, preparers, issuers, auditors and regulators must now accelerate their efforts to seize this unique opportunity. They must set clear goals and deliver the necessary convergence, consistency and enforcement required. I will be pressing all concerned in Europe to play their part.

Structured finance

The final regulatory initiative I'd like to touch on concerns the complex structured finance activities that financial institutions engage in with their corporate clients. Last May, the Commission joined with federal banking regulators in requesting public comment on a proposed interagency statement concerning these activities. This guidance emphasized the need for financial intermediaries to be diligent in avoiding involvement with products that are designed to evade an accounting or legal requirement.

Let's be clear where the common ground is. I think we all agree that we cannot go back to the days of Nigerian barge transactions, Raptors and Jedi's, with bankers, lawyers and accountants working feverishly to design exquisitely complicated transactions that serve no legitimate business purpose, but that achieve a favorable financial statement result. There is now a widespread understanding that financial services professionals are accountable, reputationally and sometimes legally, for the transactions they help their corporate clients design and execute.

Structured finance transactions pose no problem for the markets or market participants when they are properly disclosed and serve legitimate business ends - such as effecting a real transfer of risk, a real hedge of a liability, or a real influx of third-party capital. Corporations often need complicated structures to achieve these goals in the most efficient manner possible, and there is nothing wrong with bringing together the brightest financial, legal and accounting minds to create the optimal strategy for a corporate client. These same professionals simply must realize that they cannot ignore the corporation's real reason for wanting to do the transaction. We need to be clear that engineering a particular accounting result is not by itself a legitimate business objective.