Are you in compliance?

Don't miss out! Sign up today for our weekly newsletters and stay abreast of important GRC-related information and news.

Get updates on Compliance Week offerings, including new features, databases, research, and other resources, along with announcements of upcoming Webcasts, conferences, seminars, CPE/CLE opportunities and more.

Published every Thursday, Compliance Week Europe offers a condensed summary of risk, audit, and compliance news either originating in Europe, or of special interest to European compliance professionals. This newsletter will follow developments by the European Commission, as well as those of national governments across the region, or any U.S.-based news that might have consequence across the Atlantic. Frequency: weekly; Thursday a.m.

A fresh edition of Compliance Week delivered via e-mail and online every Tuesday morning, relentlessly focused on the disclosure, reporting and compliance requirements of our 25,000+ paying subscribers.

Published every Friday, Compliance Weekend was launched at the behest of subscribers, and offers a quick Plain English review of the week's key developments. We hope you enjoy this supplement to Compliance Week's Tuesday edition.

FAF Calls for Bigger FASB Role in Condorsement

Tammy Whitehouse | November 16, 2011

In moving toward international rules, the Securities and Exchange Commission needs to look more closely at how to assure its authority over accounting in U.S. capital markets, according to the overseer of U.S. accounting rules.

The board of trustees of the Financial Accounting Foundation sent a letter to the SEC saying they generally agree with the “condorsement” approach that SEC staff outlined in a May 2011 paper, where the United States would continue to converge its rules to international rules while endorsing and adopting international rules individually over time. The SEC has indicated it will make some kind of determination on a U.S. adoption of International Financial Reporting Standards in 2011, pending more progress by the Financial Accounting Standards Board and the International Accounting Standards Board to shore up major differences between the two rule books. SEC staff members also have said they will share more of their research on how international rules are applied where they are followed and how U.S. rules still differ from international rules, but those promised white papers have not yet been published.

In a six-page letter to the SEC, FAF trustees said they support incorporation of IFRS into U.S. Generally Accepted Accounting Principles as described in the staff paper, but they have some suggestions about how the SEC can refine the approach to retain its ability to protect U.S. investors as authority over accounting rules moves to an international body. FAF says the SEC should agree to incorporate IFRS while also establishing a role for FASB in the international standard setting process. FASB should have the right to participate in IASB deliberations, in FAF's view, conducting their own due process, outreach and implementation review on IASB projects and standards.

FAF says the SEC should preserve FASB's role as the independent standard setter of U.S. accounting rules in the United States. FASB should be charged with incorporating into U.S. GAAP international standards that improve GAAP or that improve comparability of GAAP to international rules while avoiding taking up new projects in the U.S. are already on the IASB agenda, FAF says. The United States should also contribute a fair share of funding to the IASB to help develop a suitable funding method for the IASB that will enable it to operate more independently.

“The recommended approach complements the SEC's primary responsibility of facilitating investor protection in the U.S. capital markets and reinforces the U.S. standard setter's mission of setting standards that provide necessary financial information to investors in the U.S. capital markets,” writes John Brennan, chairman of FAF in his letter to the SEC. FAF's suggested approach “achieves the objectives of the condorsement framework and represents an appropriately measured step forward in the ongoing U.S. commitment to the development of global standards.”

recent PwC survey suggests finance professionals aren't as convinced as they once were that the SEC will ultimately require IFRS in the United States. In March 2011, 80 percent of survey respondents believed mandatory IFRS adoption was inevitable, while only 63 percent believed it this fall. Of the 2,700 mostly finance professionals who participated in the fall survey, only 35 percent supported the SEC's condorsement approach, while 29 percent said GAAP should move closer to IFRS but still allow for U.S.-specific differences.