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Retired Deloitte Partner James Schnurr Is Named Chief Accountant

The SEC tapped retired Deloitte LLP partner James Schnurr as the next chief accountant, replacing Paul Beswick who’s returning to the private sector. The agency said that he will take over the position in October.

The SEC named retired Deloitte LLP partner James Schnurr as the next chief accountant on August 26, 2014.

The commission said Schnurr will start in October. He replaces Paul Beswick who’s returning to the private sector.

“Jim’s broad expertise in accounting, reporting, and risk management will help foster investor confidence by holding companies accountable for their financial reporting requirements,” said SEC Chair Mary Jo White. “His deep knowledge of accounting and auditing standards coupled with his extensive experience interacting with regulators and accounting and auditing standard setters will be invaluable to the Commission.”

Schnurr retired from Deloitte at the end of May where he was vice chairman and senior professional practice director specializing in financial and SEC reporting for public companies.

Schnurr said he is “honored” to join the SEC and “look forward to working with the Commissioners and the Commission’s talented staff to ensure that companies are providing accurate and complete financial information and that auditors are upholding the public trust in providing assurance to investors about that information.”

Since taking over the SEC in April 2013, Mary Jo White has said several times that she considers an IFRS rule a high priority, and Schnurr is expected to play a key role in developing policy on international standards for the agency.

White’s never specified what the rule may include, but her statements have sparked some speculation among financial professionals that IFRS may take on a greater role in the U.S. financial system. Giving U.S. companies the option to use IFRS as an alternative to GAAP is a frequently cited possibility.

In a May 20, 2014, speech, White said that coming up with an answer is a priority for the commission because the agency has had six years of experience in convergence projects, and foreign companies have been allowed to use IFRS without reconciling their financial statements to U.S. GAAP.

While Schnurr’s views may have evolved since December 2007 when he participated in a roundtable on IFRS hosted by the SEC, at the time he said the impact on U.S. markets would be positive or neutral if some companies reported in IFRS and others in U.S. GAAP.

“If you look at particular industries right now, you know, they’re very global,” Schnurr said at the time. “For example, the pharmaceutical industry. So we will have a lot of companies already reporting on their IFRS, who are domiciled in EU. If the U.S. companies elect the option and adopt IFRS, there will be much more comparability with respect to that particular industry, and therefore I view that as a very positive impact on the markets.” The roundtable was moderated by the head of Corporation Finance at the time, John White, the husband of the current SEC chair.

Schnurr added that analysts and investors have been able to deal with companies reporting under IFRS and U.S. GAAP and make comparisons.

“So while there might be more companies that will be in that position, I don’t think it will have an adverse impact on the markets,” he said.

Former FASB chairman Robert Herz said a lot has happened since the roundtable.

Back then, Herz said Big Four accounting firms were in favor of convergence. Now, “the sense is that while they believe getting a single set of global standards is a worthwhile objective, I think at least the U.S. people tend to be a little more sanguine on the prospects for that given that the two boards [FASB and IASB] have not been able to come together in the last few years much other than revenue recognition.”

Financial Accounting Foundation President and CEO Teresa Polley congratulated Schnurr and said the FAF, the FASB, and the GASB look forward to working with him.

“Mr. Schnurr has an extensive background in working with the SEC and other important accounting organizations on key accounting, financial reporting and auditing issues,” Polley said in a statement. “He has demonstrated a commitment to interpret and apply standards in a manner that promotes the transparency, quality and usefulness of financial reporting.”

Center for Audit Quality executive director Cindy Fornelli said, “Jim has made significant contributions on many important initiatives through his work with the CAQ’s Professional Practice Executive Committee. As the SEC’s new Chief Accountant, he will bring a valuable understanding of the regulatory and standard-setting process and expertise in risk management, which will benefit investors and the public company auditing profession.”

President and CEO Marie Hollein of Financial Executives International said “his technical and leadership skills will be of great benefit to all of the SEC’s constituents.”

Schnurr joined Deloitte in 1975 and became a partner in 1985. He was a senior partner for mergers and acquisition services from 1994 to 2002 and served as a deputy managing partner of professional practice from 2002 to 2009. He also served on various advisory panels of the FASB, the PCAOB, and the AICPA.

“We are extremely proud that our retired partner, Jim Schnurr, has been appointed to this vital role,” said Deloitte spokesman Jonathan Gandal. “Jim has a long-standing commitment to protecting the capital markets and we know he will serve the Commission with distinction.”