The Office of the Chief Accountant of the Securities and Exchange Commission published its final staff report on the Work Plan for global accounting standards.
The report, which the commission ordered to help it evaluate the implications of incorporating International Financial Reporting Standards in the U.S. financial reporting system, came hedged with warnings that it in no way indicates that the SEC has made any decision regarding incorporation.
Instead, it examines IFRS and the arguments for and against various forms of adoption. It notes that early on in the process, it became clear to the SEC staff that an outright declaration of International Accounting Standards Board standards as authoritative was "not supported by the vast majority of participants in the U.S. capital markets," and instead, the staff focused on the pros and cons of methods of incorporation.
The report was completed under the OCA, whose head, Chief Accountant James Kroeker, has announced that he will be leaving the SEC for the private sector this month (See Kroeker to Leave SEC in July).
In its findings, the SEC staff noted that IFRS had improved in comprehensiveness, but still had some gaps. The report also recommended that the IASB rely more on national standard-setters, and noted that the IASB's parent, the IFRS Foundation, needs to shore up its funding and broaden the base from which it is gathered. The report pointed out how industry regulators had concerns with transitioning to IFRS and how it lacks many industry-specific standards.
Shortly after the SEC released the report, the Financial Accounting Foundation, parent of the Financial Accounting Standards Board, released a statement commending the staff. "The FAF and the FASB look forward to examining the report in greater detail and will continue to closely monitor the commission’s next steps," said FAF president and CEO Teresa S. Polley. “The FAF and the FASB remain committed to creating greater comparability in global accounting standards as we pursue our central mission: Ensuring that investors, lenders, and other providers of capital benefit from high quality accounting standards that can be consistently applied, interpreted, and enforced, and that produce the most useful, clear, and transparent financial reporting possible."
The American Institute of CPAs also released a statement commending the staff. "We applaud the SEC staff for its robust efforts to review IFRS and we urge the commissioners to consider the staff report with expediency because the world’s capital markets know no borders,” said institute president and CEO Barry Melancon.
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