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Lawmakers Want Answers About IFRS

During a House hearing, Keith Higgins, the head of the SEC’s Corporation Finance Division, responded to questions about the market regulator’s consideration of IFRS for U.S. companies. SEC Chair Mary Jo White has said several times that the IASB’s standards are a rulemaking priority for her. But it’s far from clear when a rule will be considered or what it will require, and lawmakers are asking for more details.

More members of Congress are growing restless about the prospect of an SEC rule on IFRS.

In May, Chair Mary Jo White told the Financial Accounting Foundation (FAF), the parent organization for the FASB, about her interest in giving IFRS a fuller hearing. But White has made little progress on the issue, and many financial professionals, and lawmakers, wonder how much time the agency should spend on a subject that is getting less and less support.

“Chair White in May gave a speech, explaining that she wanted to use International Financial Reporting Standards more aggressively in the future, and I wondered if you have an opinion whether or not using IFRS in our capital markets might create a confusing situation and have two competing systems at the same time, a double GAAP, so to speak,” Rep. Mick Mulvaney, a Republican from South Carolina, asked the SEC’s director of Corporation Finance, Keith Higgins, during a July 24, 2014, hearing with the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises.

“I believe the chair’s position on IFRS is she would like to get a sense of a path forward by the end of this year, I think that’s what she said publicly,” Higgins responded. “Whether it causes confusion currently, foreign issuers are allowed to file under IFRS, and there is no GAAP reconciliation required.”

Higgins did not discuss whether the SEC would give U.S. public companies an option to use IFRS.

“The commission is trying to sort through the path forward for U.S. companies,” Higgins said.

Rep. Mulvaney’s question followed a June 27 letter signed by 12 members of the Congressional Caucus on CPAs and Accountants that asked White to carefully consider the problems that could develop from U.S. adoption of IFRS. (See Lawmakers Ask White to Move Slowly on IFRS in the July 22, 2014, edition ofAccounting & Compliance Alert .) Mulvaney is not a member of the caucus.

In May White said she wants to use IFRS more “aggressively” in the U.S. without explaining how that use will come about.

White has been at the SEC’s helm since April 2013. Since taking over the agency, she’s spoken publicly about IFRS on a handful of occasions, usually in response to reporters’ questions. Each time, she’s called consideration of the international standards a high priority but has given no timetable for when a rule would be considered.

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