SEC Chief Accountant: IFRS Convergence a Priority

Advancing convergence to International Financial Reporting Standards (IFRS) will be a high priority for the U.S. Securities and Exchange Commission (SEC) in the weeks and months ahead, said the organization’s new chief accountant, James Kroeker, during an NYSSCPA conference on Thursday.

At the beginning of his talk, Kroeker stressed that his views are his own and that he does not speak for the SEC as a whole.

"This [IFRS convergence] is going to be a priority of the staff over the next few weeks or months,” said Kroeker, who was speaking at FAE’s SEC Conference, held in Manhattan.

However, when asked point blank whether he thought the roadmap’s 2011 deadline was realistic, he emphasized the fact that the roadmap is only a proposal and was hesitant to make any predictions or promises, given the number of issues that have been identified that will have to be addressed.

"It is important for us to turn our attention back to it [the roadmap],” Kroeker said. “The idea of a single set of high quality standards continues to be an important one and then getting to the point where we can get in a position to make and determine whether it’s in 2011 or some later date. Because that was obviously just a proposal. But I think there has been identified for us an aggressive amount, a substantial amount of, issues to deal with, so putting in place some clear, from my perspective, pillars or milestones, clear guidance on how we could accomplish those will be an important next step.”

Kroeker, who was appointed to his post on Aug. 25, said that the financial crisis has taught him the value of adopting an international standard, adding that he feels the crisis was a keen demonstration of the drawbacks in not taking a global financial outlook. Without this viewpoint, he said, the financial world will degenerate into a race to the bottom that no one, ultimately, can win.

“As we’ve seen the events of the economic crisis unfold, these events are not national events. These impacts are not national impacts,” said Kroeker, adding that, consequently, the solutions will not be solely national solutions.

The new chief accountant added a caveat, though, that the process won’t be easy. While comments the SEC received were almost universally in support of the general idea of a single, high quality international accounting standard, there were highly divergent opinions on its particulars. There is a wide variety of opinions among members of the accounting and auditing community, Kroeker said, regarding everything from the proposed standards themselves to how their ultimate adoption will be funded. He downplayed disagreements between the Financial Accounting Standards Board and the International Accounting Standards Board, though, saying that even though there is vigorous debate over the matter between the two entities, they’re more about matters of degree than about general principle and said he was encouraged by discussions between the two.

Still, recognizing that there are still a lot of issues to settle, he said that the SEC is still committed to working towards an international standard and that the further extension of the now closed comment period, back in February, should not be seen as a sign of flagging interest. The extension was made to accommodate those who wanted more time to make their feelings known.