Mary Schapiro, President-elect Barack Obama's choice as chairman of the Securities and Exchange Commission, signaled that she could delay the planned transition to International Financial Reporting Standards.
Outgoing SEC Chairman Christopher Cox has been pushing for a move to IFRS from U.S. generally accepted accounting principles, and recently issued a proposed roadmap for convergence. The roadmap would require most public companies to make the switch by 2014, with the 20 largest companies in particular industries transitioning by 2010 (see SEC Publishes Proposed Roadmap).
The roadmap is currently out for comment, and some companies are already worried about the costs of the transition, which the SEC estimates at up to $32 million for the biggest companies. Schapiro is worried about the high cost, the independence of the International Accounting Standards Board and the looser nature of IFRS's principles-based standards. "I will take a deep breath and look at this entire area again carefully and I will not necessarily feel bound by the existing roadmap that is out for public comment," she told the Senate Banking Committee.
IFRS lacks the tens of thousands of pages of guidance in rules-based GAAP. "I would proceed with great caution so we don't have a race to the bottom," she said. "I have some concerns about the IFRS standards generally." Schapiro noted that IFRS is "not as detailed as the U.S. standards."
"I will take a deep breath and look at this entire area carefully," she added.
Schapiro also plans to toughen the agency's regulatory and enforcement efforts in the wake of criticism over lax enforcement that contributed to the financial crisis.
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