Following on yesterday's post - Will SEC Speak On IFRS This Week? - which noted remarks by SEC Chief Accountant Jim Kroeker in and around an IFRS Advisory Council meeting in London earlier this week, ascribing an 'optimistic' attitude about SEC's impending decision on IFRS (as cited by Reuters' Huw Jones), and a sense that the U.S. 'nears an accounting shift' ( according to WSJ's Michael Rapoport), there are some other significant developments announced during the past few months, and the past month in particular, that indicate the IASB and FASB are gearing up to position themselves, and assist in positioning a favorable decision (favorable to each of the respective standard-setters) by the SEC, on the question of whether, when and how to permit or require the 'use of IFRS' by U.S. public companies.
For openers, as noted in our post yesterday, the operative phrase 'use of IFRS' - and upcoming criteria for gauging the 'use of IFRS' - is a term d'arte used in the report issued by the Monitoring Board of the IFRS Foundation on Feb. 9. A companion report released that day by the IFRS Foundation Trustees emphasizes the importance of 'full adoption' of IFRS vs. relying on ongoing convergence, 'convergence by another name' (a warning note messaged in an earlier speech by IFRS Chairman Hans Hoogervorst), or, potentially, vs. hybrid methods of adoption of IFRS such as the SEC staff's suggested 'condorsement' model floated in a May, 2011 SEC staff paper.
Although the Monitoring Board of the IFRS Foundation and the IFRS Foundation Trustees discuss the need to allow for transition time and for individual countries to develop endorsement (of IFRS) and funding (of the IFRS Foundation) mechanisms that serve to satisfy individual countries' sovereignty interests while supporting the shared goal of global accounting standards, the reports of the two groups issued on Feb. 9 also can be viewed as supporting key milestones identified in the SEC's Work Plan on IFRS, regarding the financial and qualitative viability of the IFRS Foundation and IASB. (Note: the word 'qualitative' viability is mine, I am referring to the governance issues and other foundational issues to support the continuation of promulgation of independent, high quality accounting standards.) Significantly, the IASB Chairman Hoogervorst has also been quoted in recent reports as saying he believes there is a need to give greater formalization to the role of national standard-setters vis-a-via the work of the IASB, and this would include, presumably, giving greater formalization of the role of the FASB board and staff vis-a-vis the IASB at such time as the SEC announces its decision as to the 'use of IFRS' in the U.S.
Two other developments to keep in mind
Besides the Feb. 9 reports and recent remarks of the SEC Chief Accountant cited above and in yesterday's post, two other developments are key in considering what the SEC's decision on the 'use of IFRS' may be, in terms of the SEC's comfort level with increasing the use of IFRS in the U.S., and in judging how best to consider the potential future role of the FASB vis-a-vis the IASB:
IASB Roundtables in U.S., Canada and UK on Agenda Consultation (FEI summary)
FAF Board of Trustees Submits Comment Letter on SEC Staff Paper on “Condorsement,” Exploring a Possible Method of Incorporation (File No. 4-600) (FAF comment letter)
CFO.com's Sarah Johnson wrote on this subject today, and although I don't agree with her use of the word 'weaken' in the title of her article, it is worth reading: SEC Seen Mulling Weaker Role of the FASB.