Securities and Exchange Commission chair Mary Schapiro told an accounting group that “investors are not as confident as they could be” in accountants, and she plans to make some changes.

During a speech Tuesday at the Financial Accounting Foundation’s Annual Board of Trustees Dinner, Schapiro discussed the ongoing convergence efforts of the Financial Accounting Standards Board, which the FAF trustees oversee, and the International Accounting Standards Board, along with the governance issues that have arisen. The SEC commissioners are expected to vote later this year on whether to proceed with eventually incorporating International Financial Reporting Standards into the U.S. financial reporting system, and what the updated roadmap will look like. Schapiro’s comments on the ongoing convergence efforts are closely watched by the accounting standard-setters.

While she betrayed little sign of how she will eventually vote on IFRS, she was less guarded on the issue of investor confidence in accounting standards.

“At the SEC, we have heard from investors that they are not as confident as they could be, and they have areas in which we all could expect more from accountants, from accounting standards, from regulators and from those who provide assurance through the audit process,” she said. “I believe that, when your customer asks for more, especially after the challenges of recent years, you need to listen.”

Schapiro noted that the SEC and FASB are not only listening, but acting. She enumerated several examples, including their work on off-balance sheet transactions and the elimination of the exemption for qualifying special purpose entities. Schapiro said the SEC has also been closely monitoring the new standards to safeguard against attempts to circumvent them, relaying its findings to FASB, and then conferring with FASB on any further refinements that need to be made.

Schapiro said the FAF has also put in place its own monitoring strategy to evaluate the effectiveness of new standards once they have been introduced. “We’ve learned that even well-considered first efforts don’t always work as planned,” she said. “And we’ve learned that, rather than declaring a problem solved and moving on, both the SEC and the FAF need to take stock of the effectiveness of new standards and identify needed changes before a crisis reveals an unexpected weakness.”

To advance that effort, FASB and the Public Company Accounting Oversight Board will be participating in a new Financial Reporting Series of roundtables that the SEC staff is putting together, Schapiro noted. At the roundtables, the SEC will be listening to participants to learn out about areas for potential improvement in the new standards and emerging issues that could present a risk to the reliability of financial reporting.

Schapiro commended the PCAOB for its re-examination of the auditor’s reporting model in an effort to better understand what information investors need from auditor reports that they aren’t getting today.

On the subject of convergence with IFRS, Schapiro did not commit herself one way or the other.

“As we work to improve domestic accounting standards and the way in which they are supported, we are also looking closely at the question of incorporating IFRS into the financial reporting system for U.S. domestic companies,” she said. “The SEC staff is considering a number of factors. But let me be clear up front: our primary consideration is, and will continue to be, the best interests of U.S. investors. In the meantime, we consider the ongoing work of the FASB and the IASB together to develop and improve financial accounting standards to be of vital importance.”

Echoing SEC Chief Accountant James Kroeker in a speech earlier this month in New York, Schapiro said she was “pleased” that the members and staff of both FASB and the IASB are prioritizing projects in the areas of revenue recognition, leases, financial instruments and insurance.

“And I am pleased that this effort is marked by rigorous procedures, including pre-implementation reviews and outreach,” she added. “While performing research and conducting field studies take time and demand patience, they are important elements of due process and they are the key to effective results that will eventually lead to high-quality, converged standards. As the FASB moves into the phase of final deliberations on many of the highest-priority projects, let me encourage you not only to look at these reviews and field studies, but to evaluate carefully the feedback and extensive comments received on the proposals, as well. I encourage you—as you work to make informed decisions within a thicket of competing views—to give particular weight to the opinions of the investors whose needs must remain at the center of this debate.”

Schapiro summed up this section of her speech with carefully worded encouragement to FASB and its parent organization, the FAF, without tipping her hand on how she will eventually vote when the IFRS roadmap next comes before the commissioners. “Looking forward, I believe the FAF and FASB will continue to play a substantive role not only in achieving the promise of high-quality global accounting standards but also—should the Commission decide to move forward with incorporation—in helping to maintain those standards, as well.”

Schapiro also continued to make the case for a guaranteed source of funding for the IASB, which is one of the milestones that need to be considered in the current work plan for incorporating IFRS. She first noted with approval that the other standard-setting board overseen by the FAF, the Governmental Accounting Standards Board, will now receive a stable source of funding under the Dodd-Frank Act of 2010.

“I am pleased that the Dodd-Frank Act recognized the importance of sufficient and stable resources by authorizing the Commission to require a national securities association to fund the GASB by establishing an annual fee,” she said. “The Commission recently directed FINRA to establish this fee, which will strengthen the independence of the GASB as the trustees will no longer need to solicit contributions from the very people who must apply the standards that the GASB develops.”

Schapiro was the CEO of the Financial Industry Regulatory Authority before she took the helm at the SEC in 2009. Since arriving at the SEC, she has periodically called for changes in the governance structure of the IASB.

“Yet another important standard-setter, the IASB, lacks an independent and assured source of funding, as the IFRS Foundation has no authority to impose funding requirements,” said Schapiro. “The threats of interference during the financial crisis serve as a continued reminder of the importance of financial independence for the IFRS Foundation and the IASB.”

Schapiro also sits on a Monitoring Board of government regulators from various countries that has been established to provide backing and oversight of the IASB and its parent foundation. “I know from my role as a member of the Monitoring Board that the trustees of the IFRS Foundation are working closely with regulatory and other public authorities and key stakeholder groups to explore more stable funding mechanisms,” she said. “Until then, however, funding for the IASB will remain a challenge. And so the SEC’s staff continues to evaluate short-and long-term options for assisting the IFRS Foundation. I would like to thank the FAF and its leadership for their continued input and support on this important issue.”

As she concluded her speech, Schapiro re-emphasized the need for a steady funding source. “A financial accounting board setting standards on which investors rely in a global financial marketplace measured in the hundreds of trillions of dollars, should not have to rely on voluntary contributions,” she said.

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