Time to Bury IFRS Hopes for the United States?

• DOI: http://doi.org/10.1002/jcaf.22011
• Author: Robert W. Rouse
• Published date: 01 November 2014
• Date: 01 November 2014

81

© 2014 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.22011

SEC

D

e

p

a

r

t

m

e

n

t

s

Robert W. Rouse

Time to Bury IFRS Hopes for the

United States?

Somewhere in the wandering

mind of this columnist is a faint

memory of his Latin classes.

Mark Antony delivered the

eulogy for Julius Caesar with the

following dialogue:

Friends, Romans, coun-

trymen, lend me your

ears; I come to bury

Caesar, not to praise

him; The evil that men

do lives after them, The

good is oft interred

with their bones, So let

it be with Caesar.

HOW WE LOST IFRS

PARTICIPATION

The relevance of the pre-

ceding quote will, hopefully, be

found in a speech delivered by

former Securities and Exchange

Commission (SEC) Chairman

Chris Cox at the 33rd Annual

SEC and Financial Reporting

Institute Conference. In the key-

note address, “How America’s

Participation in International

Financial Reporting Stan-

dards Was Lost,” the chairman

remarked, “When I was SEC

Chairman, I worked to ensure

that the United States was doing

everything necessary to make

financial information from

companies in different countries

both comparable and reliable.

But that was several years ago.

And a great deal has changed

since then. Today, I come to

bury International Financial

Reporting Standards (IFRS),

not to praise them.”

Mr. Cox continued, “The

fact is, far too much time has

gone by with no meaningful

progress. I think we have to

fairly conclude that the moment

has passed. Full-scale adoption

of IFRS in the United States

might once have been possible,

but it is no longer. This is not a

prognosis. It’s just a statement of

fact.”

A half-dozen years ago, the

stars were aligned to make it

not impossible that the United

States could actually join and

perhaps even lead this global

effort. Following the SEC’s deci-

sion in November 2007 to allow

foreign private issuers to use

IFRS without reconciliation to

U.S. generally accepted account-

ing principles (GAAP), many

believed that at least permission

for U.S. filers to use IFRS was a

foregone conclusion. In January

2008, participants in a Financial

Accounting Standards Board

(FASB) roundtable predicted it

would take five years to com-

plete America’s shift from U.S.

GAAP to IFRS.

Almost seven years have

passed. The high tide of Ameri-

can enthusiasm for IFRS has

receded. While the SEC still says

that IFRS is a priority, moving

the United States toward IFRS

is clearly not a priority.

This doesn’t mean that the

SEC is not executing on its

priorities. Rather, it means that

registrants and investors are not

saying clearly that they want it.

Currently, there is no plan for

expanding the voluntary use of

IFRS.

DRIFTING AWAY FROM IFRS

The United States has

drifted away from IFRS. The

reasons go well beyond the cool-

ing of the SEC’s interest. As

America moved closer to the

reality of being part of a global

system, and the actual details of

what it would mean came more

clearly into focus, the experience

proved troubling.

What American stakehold-

ers want from their account-

ing standard setter is relatively