A few weeks ago, the Securities and Exchange Commission formally proposed a road map that could result in the mandatory adoption of international financial reporting standards by US domestic financial report filers. For the largest filers, this could start as soon as 2014.
Beginning November 14, the SEC has opened up a 90-day period for comment on the road map. The SEC’s 165-page report says that making IFRS mandatory should improve the comparability of financial data prepared by foreign companies and US public companies.
Seven “Milestones” Must Be Met in order to Allow IFRS use in the US, including:
• Improved quality of accounting standards at the IASB and Financial Accounting Standards Board.
• Progress toward a funding mechanism for the International Accounting Standards Committee Foundation that is safe, steady, and independent.
• Improved interactive data capabilities for IFRS reporting.
• Early, voluntary IFRS use to show how it will improve financial reporting comparability.
• Proper IFRS education and training for investors, accountants, and auditors.
• SEC rule making fits that with domestic IFRS use.
• Determining whether it makes sense to adopt mandatory IFRS use and figuring out the best ways to sequence it.
Under the SEC proposal, large companies that meet specific criteria would be allowed to apply voluntarily for IFRS in the US. The SEC says that the increase in competition between global markets to raise capital is a key reason for letting US companies use IFRS within the country. The SEC also notes the value of adopting a single, widely accepted set of standards that would benefit US investors and the international markets.
According to Stockbroker Fraud Attorney William Shepherd: “In early 2007, we commented on the “race to bottom” regarding de-regulation and the ever-looser accounting standards for global corporations. Since then, we have witnessed a global meltdown of the financial industry. Yet, deregulation champion SEC Chairman Chris Cox, who has apparently never met a white collar criminal he did not adore, is using his last few days in office to relinquish accounting standards to foreign control. This comes on the heels of George Bush granting co-control over U.S troops and contractors to a shaky Iraqi government. What happened to an administration that disdained the UN, for example, even appointing a US ambassador who openly stated the UN should be disbanded and the US should not pay its dues? This is the most hypocritical group of people who ever walked the face of the earth!”
Related Web Resources:
Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers, November 14, 2008, (PDF)
Submit Comments on File No. S7-27-08
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