SEC Chair Mary Jo White Urges Further Cooperation on International Accounting Standards

By:
Chris Gaetano
Published Date:
Jan 5, 2017
SECURITIES-AND-EXCHANGE-COMMISSION-facebook

SEC Chair Mary Jo White issued a public statement today expressing strong support for the development of high-quality globally accepted accounting standards and urged her successor under the new administration to build on the work that has already been done.

While the primary set of accounting standards in this country is U.S. Generally Accepted Accounting Principles (GAAP), White pointed out that International Financial Reporting Standards (IFRS) still has a significant presence here. People in the U.S., she said, make investments in foreign companies and they make decisions concerning these investments using financial statements that use IFRS. She noted that there's over $4 trillion invested in U.S. mutual funds holding debt and equity securities issued by companies outside the U.S., many of which are in jurisdictions that use IFRS in their reporting regimes. U.S. companies also rely on IFRS financial statements when considering joint ventures or acquisitions of foreign companies, and might even have to prepare them themselves when they have foreign subsidiaries. 

With all this in mind, White said that understanding IFRS, including similarities and differences with U.S. GAAP, is of central importance, as is ensuring those standards are of the highest quality. To facilitate this, she said that the SEC must encourage and support further efforts towards convergence between GAAP and IFRS. While acknowledging the work already done through the two boards' convergence project with topics such as leases, revenue recognition and credit losses on financial instruments, she said things cannot stop there. 

"Continued engagement will facilitate the development of standards that recognize and address the differences across jurisdictions without sacrificing financial reporting quality," said White in her statement. 

She acknowledged that IFRS has sometimes been a hard sell in the U.S. While there had been moves to adopt IFRS years ago, these efforts have largely stalled due to lack of support among people here. While White said the commission has been advised that U.S. constituents do not support a move to, or an option to use, IFRS for financial reporting by U.S. companies, she said it is still very important for the U.S. to understand the international standards, nor does it lessen the importance of the broader work to further enhance globally accepted standards. 

"While it is now clear that U.S. GAAP and IFRS will continue to coexist in our public capital markets for the foreseeable future, it is just as clear that the efforts to enhance the respective standards and to reduce differences between them should continue.  The United States cannot afford to be myopic about this issue in light of the benefits of these efforts for all stakeholders.  Strong support of both the FASB and the IASB by U.S. investors, companies, auditors, and others, including the Commission, is essential," said White. 




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