* SEC to make global accounting proposal in coming months
* IASB's Hoogervorst welcomes latest SEC comments
By Huw Jones
LONDON, Feb 20 A senior U.S. regulator was
"optimistic" on Monday about finding a framework for the world's
top economy to use global book keeping rules for investors to
compare cross-border companies.
"We are hopeful we can put forward a model," James Kroeker,
chief accountant at the U.S. Securities and Exchange Commission
(SEC), told Reuters.
More than 100 countries, including Europe, use accounting
rules from the International Accounting Standards Board (IASB)
and are waiting to see if the world's biggest capital market,
with up to 12,000 listed companies, adopts them too.
Other heavyweights like Japan would likely follow suit.
Kroeker said the SEC had delayed its decision due the more
urgent and heavy work of fleshing out a reform of Wall Street
known as Dodd-Frank.
Work on aligning U.S. and IASB accounting rules aimed at
paving the way to U.S. adoption has also taken more time, along
with a review of IASB governance.
Kroeker said he will make a proposal to SEC commissioners in
"coming months" on how the United States could switch, which
would spark changes in how the IASB deals with national bodies.
He downplayed the notion of smaller firms being able to opt
out indefinitely if U.S. adoption went ahead.
"Having a model that works for everyone, even if there is a
delay in timing, is important, otherwise you ingrain the idea
that the smaller companies will never have to change and you end
up with a two GAAP system permanently in the U.S.," he said.
Kroeker was in London to attend the IASB's advisory council
where he gave an update on the U.S. adoption decision.
"I would not want to let a handful of areas that are
particularly challenging hold up the broader important decision.
There might be ways we need to finesse over time. There will be
some areas we might not align on day one," he told the meeting.
IASB Chairman Hans Hoogervorst, under pressure from IASB
member countries to move on from years of heavy focus on
convergence with U.S. rules, welcomed Kroeker's comments.
"It was a very solid and confidence-boosting statement. I
think they are on the right track," IASB Chairman Hans
Hoogervorst told Reuters.
To reassure the United States it would still have a strong
voice after adoption, Hoogervorst spoke of the need for a new,
multilateral mechanism to keep national standard setters like
the U.S. Financial Accounting Standards Board (FASB) plugged
into the IASB rulemaking process.
"If we only have informal bilateral relations... then the
potential for chaos is massive," Hoogervorst told the meeting.
Kroeker said the U.S. would not expect preferential
treatment after adoption but there was a need to maintain a
strong American voice from the start in IASB rulemaking.
"Multilateral agreement would be important and involvement
early on would be critical," Kroeker said.
A multilateral mechanism could also deal with remaining
differences between national and IASB rules after adoption.
"It does leave open the possibility that there are some
areas where we will have to continue over time to narrow the
differences," Kroeker said.
FASB could decide not to apply an IASB rule that "does not
improve financial reporting for U.S. investors," Kroeker added.
After Kroeker makes his proposal, SEC commissioners will
likely hold a public consultation ahead of a vote, perhaps later
this year. Any U.S. adoption would likely be over several years.
World leaders, including U.S. President Barack Obama, called
in 2009 for a single set of global accounting rules to improve
transparency for investors and regulators.