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United States IFRS decision 'most important since the 1930's'

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04 Dec 2012

In a speech to the American Institute of CPAs (AICPA) 2012 Conference on Current SEC and PCAOB Developments, Paul A. Beswick (Acting Chief Accountant of the United States Securities Exchange Commission), said the decision on whether IFRS should be adopted in the United States may be the "single most important accounting determination for the Commission since... the 1930's".

Notwithstanding his comments regarding the importance of the SEC's decision on IFRS, Mr Beswick gave little away in terms of the next steps the SEC might take, other than expressing an expectation of working with the new SEC Chair, Elisse B. Walter, and existing SEC Commissioners and commenting that people should "please stay tuned".

Mr Beswick also discussed a broad range of topics, including the FASB's work around disclosures (including its proposed disclosure framework), and the corollary issue of what consideration should there be to creating overlap with existing financial reporting requirements outside the financial statements such as the MD&A (Management's Discussion and Analysis) required to accompanying financial statements.

In discussing the various IASB-FASB convergence projects (leases, revenue recognition, financial instruments and, to a lesser extent within the context if his speech, insurance contracts), Mr Beswick noted he was "encouraged about the level of convergence in the revenue and leases projects that Boards have achieved to date".  Calling for "perspective" on the financial instruments project, he noted it was "almost unthinkable by some that the Boards would be able to reach substantive agreement on classification and measurement" and that the "Boards are a lot closer than probably many would have guessed".

Mr Beswick went on to lament the failure of some to "acknowledge that the finalization of these projects will improve financial reporting for the benefit of investors".  He also noted the challenges in achieving converged approaches to the interpretation and implementation of standards resulting from the projects and the need for securities regulators to work together on a global basis.

The conclusion of the discussed various other issues such as auditor independence, the need for strong internal control over financial reporting, and the various developments worldwide looking to improve the audit report.

Click for full text of Mr Beswick's speech (link to SEC website).

A number of other SEC speakers also spoke at the conference on IFRS-related matters.  Jenifer Minke-Girard (SEC Senior Associate Chief Accountant) provided an overview of the SEC staff report on IFRS, noting that comments are continuing to be received on the report and are being considered.  Julie A. Erhardt (SEC Deputy Chief Accountant) outline what she saw as three recurring themes driving countries to adopt IFRS: a "domestic upgrade" to "buy" IFRS instead of developing domestic standards, the ability of IFRS to lower the cost of capital through foreign investment, and "foreign access" being more easily permitted where two trading countries both adopt IFRS.

For a detailed summary of the 2012 AICPA national conference on current SEC and PCAOB developments, see the Deloitte (United States) Heads Up newsletter.

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