The Securities and Exchange Commission has received just over 200 comment letters since it posted its proposed roadmap for transitioning to International Financial Reporting Standards on its Web site in 2008, and it’s now receiving some extra suggestions as it prepares to publicly deliberate Wednesday on the roadmap.
“As the SEC finalizes the roadmap, we believe it important to provide policymakers with the key elements of what U.S. investors see as fundamental components of such a plan,” said Sandra Peters, head of financial reporting policy at CFA Institute, which administers the Chartered Financial Analyst designation. “An overwhelming number of CFA Institute members support the premise of a single set of high-quality, understandable and enforceable global accounting standards. That said, events of the last 18 months have highlighted several important challenges to this premise.”
The CFA Institute believes that essential elements of the SEC’s roadmap must include quality standards, infrastructure improvements to the International Accounting Standards Board and the International Accounting Standards Committee Foundation, and a better-defined mission of the IASB and IASCF that supports the notion that financial statements are prepared for use by investors, not regulators. The CFA Institute also wants greater investor representation in the oversight, agenda-setting, and standard-setting process; and more attention to plans for U.S. and global enforcement and endorsement of IFRS.
At the meeting on Wednesday, the SEC plans to “consider whether to publish a statement regarding its continued support for a single-set of high-quality globally accepted accounting standards and its ongoing consideration of incorporating International Financial Reporting Standards into the financial reporting system for U.S. issuers,” according to a statement on its Web site (see SEC to Meet Wednesday on IFRS Roadmap). The meeting will also be watched closely in Europe, where patience has been running out amid continued uncertainty over U.S. intentions.
“There has been intense interest in, and speculation over, the U.S.’ commitment to International Financial Reporting Standards ever since the U.S. Securities and Exchange Commission published its historic 'roadmap' in late 2008,” said Dr. Nigel Sleigh-Johnson, head of the financial reporting faculty at the Institute of Chartered Accountants in England and Wales, in a statement, “Now is the time for the SEC to show leadership to the world at a time of continued economic uncertainty. By steering the U.S. firmly on a course towards mandatory application of IFRS and deploying its unrivalled expertise and experience in regulating financial markets in the cause of a single global accounting language, it has the opportunity to transform the global financial reporting environment at a time when the interdependencies of capital markets worldwide have never been clearer.”
Sleigh-Johnson noted that more and more countries are converging to IFRS, with major economies such as Canada and Japan currently in the late stages of convergence.
“Clarity over this issue is likely to bring substantial long-term benefits to investors not only in the U.S., but around the world, especially in the several jurisdictions awaiting a clear signal on U.S. intentions before making a final decision about switching to IFRS reporting,” he added. “Further delay in providing clarity will be very unhelpful.”