The U.S. Securities and Exchange Commission unveiled a cautious approach on international accounting rules in the latest sign that it's abandoned a plan to urge companies to switch to global regulations.
While businesses will be required to report financial results using U.S. rules, the SEC is considering letting companies also disclose how much money they earn or lose under international standards, SEC Chief Accountant James Schnurr said in a speech today.
The comments show the SEC isn't committed to a 2008 proposal that laid out a road map over many years for companies to change how they disclose financial data. At the time, the SEC said a single set of global standards would cut compliance costs and make U.S. companies more competitive. The plan drew criticism from investors and some businesses.
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"Based on what we have heard to date, it appears that U.S. constituents generally are not supportive of full adoption for a variety of reasons, including legal issues and general cost- benefit concerns," Schnurr said at a conference sponsored by the American Institute of Certified Public Accountants.
Under the latest plan, companies that don't want to use international standards wouldn't have to, said Schnurr, who became the SEC's top accountant in October. The option described today could form the basis of a recommendation to SEC Chair Mary Jo White on proposing new rules, he said.
Some U.S. companies that advocate a switch say it would eliminate duplicative accounting and make it easier for investors to compare the performance of multinational companies. Ford Motor Co. has told the SEC that one set of rules would simplify its business and allow it to communicate better with investors.
U.S. accounting rules are set by the Norwalk, Connecticut-based Financial Accounting Standards Board. The London-based International Accounting Standards Board issues rules that are followed by public companies in many European countries, Australia and Hong Kong.
Requiring all U.S. companies to switch to international rules makes less sense now than it once did, SEC Commissioner Daniel Gallagher said at today's conference. The two standard- setting groups, FASB and IASB, have done a better job of coordinating their rules, he said.
Schnurr's proposal is "a market-based way to approach this," Gallagher said. "If we allow for the issuers to put out this information, we can see if people want it. If they want it, we can think deeper thoughts" about it.
Bloomberg News
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