THE CHAIRMAN of the IASB's oversight body has criticised the US Securities and Exchange Commission for dithering over whether to adopt international accounting rules.
As the author of global accounting rules known as IFRS, the IASB has been lobbying for the US to join the majority of the G20 in incorporating the rules into its domestic financial reporting regime.
However, last week the SEC published a staff report that exhibited a distinct lack of enthusiasm for setting a timetable on when the US regulator might make a decision on whether it will move from US GAAP to IFRS.
This latest setback to the already delayed decision on IFRS adoption was met with frustration by Michael Prada, chairman of the trustees that oversee the IASB.
"While recognising the right of the SEC to determine the method and timing for incorporation of IFRSs in the US, we regret that the staff report is not accompanied by a recommended action plan for the SEC," Prada said. "Given the achievements of the convergence programme inspired by repeated calls of the G20 for global accounting standards, a clear action plan would be welcome."
The IASB has long been working with its US counterpart the FASB (Financial Accounting Standards Board) to reduce the differences between US and international rules.
The two standard setters are currently working through a number of projects on leasing, revenue recognition, financial instruments and insurance, and it is only when these are finished – probably in mid-2013 – that the convergence programme can come to end.
One fact has escaped M Prada and others who are so insistent that the SEC embrace the IASB. Section 108 of Sarbanes Oxley requires the SEC to select a standard setting body that agrees to work with the commission in enforcing Section 13(b) of the Securities Acts to fulfill the SEC's mandate to protect U.S. capital markets. Section 109 requires that body to have its budget approved by the Public Company Accounting Oversight Board AND to accept its annual funding from the PCAOB.
In fact, it is the IASB that needs to act to embrace these conditions if it wants to set standards in the U.S., not the other way around.
Such ignorance, while understandable, is highly regrettable. Is there no one at the IASB or its foundation who has investigated this law?
Posted by: Paul Miller, 18 Sep 2012 | 16:42
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