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International Financial Reporting Standards (IFRS) continue to make key gains in their acceptance in the USA, the key success area if they are ever to become a truly global standard. IFRS is now accepted as the best solution by the US Treasury, the Fed and the SEC but they have yet to win over the full US Government’s House Financial Services Committee.
The SEC has been aggressive in pushing the IFRS standards, and on Wednesday US Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke both defended the SEC’s plans. Paulson attacked those who felt that there was a loss of US sovereignty in accepting overseas developed standards or that convergence of approaches should be equated with outsourcing American standards. He said, "There are different accounting regimes with different standards and different requirements. That doesn't make them worse than ours. We've had plenty of issues with our accounting regime."
However, Congressman Michael Capuano, a member of the House Financial Services Committee, questioned the decision to change how companies report their crucial financial information at a time when the US was in the midst of a regulatory overhaul. Referring to the change, Capuano said, "If they do this right now I will have some major concerns." He was particularly worried about a changeover being done too quickly, and at a time of fragile markets.
Also yesterday, a major meeting was taking place that will speed the introduction of IFRS in the USA. The trustees of the International Accounting Standards Committee Foundation — the parent of the International Accounting Standards Board, the developers of IFRS — met to discuss changes to their constitution - how they are funded, how they are monitored, how they are managed.
Under the Sarbanes-Oxley Act, the SEC can only recognise accounting standards as "generally accepted accounting principles" if they are set by an independent and well monitored organisation with stable funding. This means the development of an international monitoring group of securities regulators, including the SEC, that would have a major say in the way the trustees ran the IASC.
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