Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson expressed their support for the convergence of International Financial Reporting Standards with U.S. generally accepted accounting principles.
Testifying at a hearing Thursday of the House Financial Services Committee, Paulson said he didn't believe support for international accounting standards would weaken the quality of U.S. financial reporting.
Rep. Michael Capuano, D-Mass., asked Paulson if he was aware of the convergence plans and whether it was wise to outsource the setting of U.S. accounting standards to international organizations.
"I'm familiar with it and I'm supportive of it," said Paulson. "There are different accounting regimes that have different standards and different requirements. That doesn't make them worse than ours. We've had plenty of issues ... in our own accounting regime."
Bernanke (pictured) said he backed the Securities and Exchange Commission's plans to allow foreign companies to file financial statements in IFRS without reconciling them with U.S. GAAP.
"There's more incentive for foreign companies to operate in the United States," he said. "It doesn't create any major problems with our accounting system." The SEC has also proposed allowing U.S. companies to file financial statements in accordance with IFRS.
Capuano has concerns about the convergence in accounting standards occurring too quickly, and proposed an amendment to the Securities Act of 2008 that would prevent the SEC from ceding its regulatory authority to a foreign agency, such as the International Accounting Standards Board. However, the amendment was dropped, and the full bill, which strengthens the SEC's enforcement powers, passed the House Financial Service Committee by a voice vote on Wednesday.
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