The Securities and Exchange Commission is taking a fresh look at the question of allowing U.S. public companies to use International Financial Reporting Standards.

SEC chief accountant James Schnurr told attendees of Financial Executives International’s Current Financial Reporting Issues conference in New York on Tuesday that he is researching the issue for SEC chair Mary Jo White.

“Mary Jo White, back in the spring, made some comments regarding the fact that it was very important for her and the Commission to address what if any alternatives with respect to use of IFRS for U.S. registrants should be considered by the Commission,” he said. “It’s been obviously many years now since the staff issued their report on the study of the use of IFRS, and there was a proposal or suggestion around condorsement in that paper. One of the first things that Mary Jo has asked me to take on is to spend some time with my staff and some others getting the benefit of all the research and the analysis that they have done with respect to a number of the alternatives that have been discussed throughout the last probably six years in terms of the use of IFRS in the U.S. marketplace.”

Schnurr noted that he and his staff at the SEC’s Office of the Chief Accountant have been working on that research.

“Over the last few weeks, I’ve been working with the staff to go through that, and I’m hoping that I’ll be in a position in the near term to provide my views to Mary Jo about the things that she should consider and then hopefully move forward with a broad dialogue with the financial reporting and investor community,” he said. “I think it’s important to focus on the fact that, in terms of the criteria that we would need to meet with respect to any alternative, the first one is that whatever that alternative is has to be in the best interests of the U.S. investor community. And secondly there would have to be an economic impact analysis that would be done in order for any rulemaking. So that would also have to demonstrate that there would not be a significant cost associated with that alternative versus whatever perceived benefits one might expect to get from that.”

Schnurr pointed out that there are some hurdles to overcome, however. “The other thing that I would comment on as part of my process of reviewing the material is that there are some very significant what you would call legal and statutory hurdles that would need to be made,” he said. “I mentioned the best interests of investors and about the economic analysis, but there are also other considerations that have to go into whether or not a particular alternative is liable to go forward. At this point, I haven’t come to any judgments, so all I can say is stay tuned and, as I said, I hope in the near term we can begin to expand the dialogue on the alternatives.”

Later, during a press conference, Schnurr was asked by Accounting Today whether he would follow the IFRS work plan that had been compiled by one of his predecessors, former SEC chief accountant James Kroeker, who is now vice chairman of the Financial Accounting Standard Board.

“Certainly I’ve looked at the information that’s in the work plan,” he responded. “It’s just one piece of information, a data point, so in terms of what direction we’re going in, I’m not really prepared to talk about that.”

Schnurr was also asked about the perception that FASB and the International Accounting Standards Board seem to be drifting apart on the financial instruments and leasing standards. “Ideally, most people would agree that one set of global standards is the long-term objective,” he responded. “Convergence is certainly an element to get there over time. Having said that, I think the FASB’s mission and constituent is different from the IASB’s. And they have to first and foremost address what’s in the best interests of the U.S. investor and convergence is a second priority to that.”

Schnurr also commented on the possibility that FASB and the IASB might delay the effective date of the revenue recognition standard that they approved earlier this year, referring to comments by FASB member Marc Siegel on Monday at FEI’s CFRI conference (see FASB Reassesses Costs of New Standards). The standard is set to take effect on Dec, 15, 2016.

“From my point of view, my interest is to protect U.S. investors,” Schnurr told the financial executives in attendance at the conference Tuesday. “In the context of the new standard, many organizations have said that there are quite a few implementation issues that need to be addressed. Appreciating the fact that many of you and your companies would like to adopt the standard on a retrospective basis, with the current timetable for the effective date and the fact that there are many unanswered questions around the implementation of this, it’s important that those questions be answered on a more timely basis and the guidance be more clear to allow you to go ahead and put into place whatever systems and processes you would need with respect to implementing the new standard.”

Schnurr noted that he has spoken to both FASB chairman Russ Golden and vice chairman Jim Kroeker about his concerns. “I think they are focused on some of the more thorny issues around performance obligations as well as the licensing,” he said. “I would expect that there will be more timely activity than what we currently have with respect to the transition resource group,” referring to the joint group that FASB and the IASB have set up to work on implementation issues for the new revenue recognition standard. “But understand that my obligation is to the U.S. investors and the implementation in the U.S. and that we will be pushing very hard in order to get the questions answered and allow you to do your jobs in terms of the implementation.”

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