The Accounting Policy & Practice Report ® provides financial accounting policy makers, advisors, and practitioners with the latest news, expert insights, and guidance on emerging, evolving,...
By Steven Marcy
Outgoing SEC Chairman Mary Jo White is pushing designated successor Jay Clayton to continue pressing for a narrowing of differences between U.S. generally accepted accounting principles and international financial reporting standards to enhance the function of capital markets worldwide.
White in a policy statement Jan. 5 said that “I strongly urge” Clayton—President-elect Donald Trump’s choice to chair the Securities and Exchange Commission—and the incoming commissioners to “to build on our past efforts” to fully integrate the two sets of standards “and give the goal of high quality globally accepted accounting standards the focus and support this critical issue deserves.”
“Global standards facilitate decision making about cross-border investments, transactions, and acquisition opportunities,” White said.
White, who has said she will depart her post by the time Barack Obama leaves the presidency Jan. 20, said that while “it is now clear that U.S. GAAP and IFRS will continue to coexist in our public capital markets for the foreseeable future, it is just as clear that the efforts to enhance the respective standards and to reduce differences between them should continue.”
A top SEC official indicated last month that efforts to narrow the standards will be drawn out.
SEC chief accountant Wesley Bricker signaled Dec. 5 that the agency won’t be taking action any time soon on adoption—or even some form of optional use—of rules issued by the International Accounting Standards Board.
“On the question of possible further use of IFRS for domestic issuers, I believe that for at least the foreseeable future, the FASB’s independent standard-setting process and U.S. GAAP will continue to best serve the needs of investors and other users” of financial statements who rely on financial reporting by public companies, Bricker said at an annual conference of the American Institute of CPAs.
The Financial Accounting Standards Board and IASB embarked on an effort in October 2002 to completely converge their standards to bring total comparability to financial statements worldwide. Despite major narrowing of differences in some ares—notably leasing and revenue recognition—too many differences still remain and new ones have emerged over the last few years to prevent convergence being achieved.
Still, the creation of a set of globally accepted accounting standards “is imperative for the protection of U.S. investors and companies and the strength of our markets,” White said. The imperative stems from the fact that international market investment in 500 worldwide companies totaled about $7 trillion, she said. U.S. investment totals about $4 trillion in mutual funds that hold debt and equity securities of firms located outside the U.S., she said.
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Chairman White's statement is at https://www.sec.gov/news/statement/white-2016-01-05.html.
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