The Securities and Exchange Commission may be preparing to put an end to all the lingering uncertainty and speculation about any possible adoption of International Financial Reporting Standards in the United States.
SEC Chief Accountant James Schnurr, appointed to his post in late August, said at a recent New York conference that he’s getting up to speed on what his predecessors have done to study a possible adoption of IFRS and plans to make a recommendation to the full commission in the next few months. He didn’t say whether the recommendation would be for or against abandoning U.S. Generally Accepted Accounting Principles and adopting IFRS in their place, nor whether the full commission is likely to act on his recommendation. Retired as a partner from Deloitte, Schnurr acknowledged the SEC could decide to take no action whatsoever, according to press reports of his remarks.
SEC Chair Mary Jo White has said she has made it a priority for the SEC to make a further statement on an IFRS adoption after spending several years working with convergence of accounting rules and having some 500 foreign private issuers that report to the Commission under IFRS with no reconciliation to GAAP. In May, White said she hoped to be able to answer questions on the SEC’s position on IFRS “in the relatively near future.”
The SEC has faced heavy pressure both inside and outside the United States to adopt IFRS as a permitted accounting standard for U.S. domestic companies. The SEC dropped the requirement for foreign private issuers to reconcile to GAAP in 2007, and the staff performed an intensive study on IFRS, but made no recommendation to the SEC in 2012 as it wrapped up its study. Then Chief Accountant James Kroeker left his staff’s findings to his predecessor, Paul Beswick, also resigned the post without making any recommendation.
As months of waiting and speculation dragged into years, the SEC has held largely silent on the issue, even as the International Accounting Standards Board has continued to push for an SEC decision. Just last week, Ian Mackintosh, vice-chairman of the IASB, said he is looking forward to working with Schnurr to help White “provide some clarity about whether and how the SEC will move forward on IFRS.” The Financial Accounting Standards Board, meanwhile, has promised to wrap up its remaining convergence projects with the IASB but is moving on to place new emphasis on simplifying and improving GAAP for use within the United States.
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