NEW YORK (Reuters) - U.S. securities regulators are reviewing a proposed roadmap to move U.S. companies to international accounting rules, but are struggling with a lack of public consensus on how to get there, a Securities and Exchange Commission official said on Thursday.
Last November, in one of the Commission’s last major projects under former Chairman Christopher Cox, the SEC staff released a suggestions that would have U.S. companies filing financial results under International Financial Reporting Standards, or IFRS, by 2014, with the option for some companies to adopt the rules earlier.
The adoption of international accounting standards by U.S. companies would move the world toward one set of standards, and might make it simpler for investors to compare companies operating in different regions. Proponents also say this would enable companies to raise capital more easily in whatever markets appeal to them.
When the SEC’s new chairman, Mary Schapiro, took over early this year, she said she would review the proposals, and SEC officials have promised to provide more clarity before 2010.
But at a New York State Society of CPAs conference in New York on Thursday, Julie Erhardt, deputy chief accountant at the SEC, said that while most of the public agrees with the concept of one single set of high-quality accounting standards, regulators have noted there is very little agreement on anything else.
“The comment letters on how to get there were an array, meaning every possible idea you could think of on how to get there, somebody had in a letter -- there was no unanimity,” Erhardt said.
The so-called roadmap proposal was originally open for public comment until mid-February, but the SEC extended that period until late April. The agency received about 220 comment letters on the topic, but that is a small number considering the change is likely to affect all of the 10,000-plus U.S. companies regulated by the SEC.
“In terms of the staff being able to say, ‘Well, here’s a majority view,’ you can’t say that,” Erhardt said of the comment letters which differed on basic concepts such as how many accounting standard setters to have, and whether the United States should permit any companies to make the switch early.
“It creates more of a blank sheet of paper for the staff working with the commissioners,” she said, noting the Commission simply “hasn’t decided yet.”
Among other issues, several companies said they do not believe the SEC has accurately estimated how much a switch to IFRS would cost, and some wonder whether Congress actually supports the proposal, Erhardt said.
Major economies like Japan, Canada, and South Korea are joining Europe and the more than 100 other countries using IFRS, but the United States, which still operates off Generally Accepted Accounting Principles (GAAP), risks remaining the last major holdout.
Some critics say that if the United States embraces IFRS, it could jeopardize more than a century of progress under U.S. accounting rules, and expose companies to more lawsuits because IFRS has largely been designed by less litigious countries and is viewed as more principle-based than rules-based.
“We’re working on what the next steps could and should be, but there isn’t a date certain to announce anything,” Erhardt said.
Reporting by Emily Chasan, editing by Matthew Lewis