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Staff Continuing to Work on IFRS, Chief Accountant Says

December 10, 2013

Many observers thought IFRS was a dead issue in the United States when the SEC last year signaled that it wouldn’t consider making a decision. Eighteen months later, with a new chairman and two new commissioners in place, that stance may be changing. Paul Beswick, the agency’s top accountant, said “everyone in the SEC” is thinking about “what the next steps” should be, and the staff is continuing to work on the decision and hoped to “get to it in the near term.”

The debate over whether U.S. public companies should switch to IFRS seemed to have ended when the SEC’s July 2012 final staff report made no recommendations on what the SEC should do and at the same time described the difficulties the U.S. would face if it switched.

A year-and-a-half later, the SEC’s top accountant indicated that the agency may soon revisit the issue.

“I think everyone in the commission thinks about the decision on IFRS, what sort of next steps are, [and] thinks it’s very important,” said SEC Chief Accountant Paul Beswick at AICPA’s National Conference on SEC and PCAOB Developments on December 9, 2013, in Washington. “We are in a position where we are continuing to work on the decision. Hopefully we can get to it in the near term.”

The agency may be picking up the issue again given the shift in the makeup in the SEC’s leadership with the addition of the two newest commissioners, Kara Stein and Michael Piwowar, in August. Shortly after taking the helm of the SEC in the spring, Chairman Mary Jo White declared her interest in IFRS by saying it is a “high priority” for her. In October, White reiterated her interest and added that fellow commissioners are discussing IFRS internally.

Nevertheless, how soon the commission can pay full attention and come to an official decision on IFRS is still not certain as White said her priority is completing congressionally mandated rules. While the SEC has made some progress with the Dodd-Frank and JOBS Act rules, it is by no means finished. and

“What many people have to realize is with the passage of Dodd-Frank and the JOBS Act, the commission had a number of issues that were presented to itself that ended up being very complex in taking a lot of time,” Beswick explained. “When you think about five commissioners, there is a certain level of bandwidth and time. That’s doesn’t mean that we think it’s any less important…. I didn’t want people to walk away with the perception we don’t think it’s important. We think it’s very important. We are dealing with some of the challenges in terms of commission’s rulemaking agenda.”

According to Davis Polk & Wardwell LLP, out of 95 rules that Dodd-Frank required the SEC to write, the regulatory agency has so far proposed or finalized 77 rules as of December 2. On the JOBS Act, the SEC has made some progress with general solicitation and crowdfunding rules this year.