SEC Chief Accountant Promises "Clarity" on IFRS Road Map This Fall


SEC Chief Accountant James Kroeker on Friday reconfirmed the SEC’s commitment to provide clarity this fall on its proposed road map for the adoption of IFRS by U.S. public companies.


In response to a question following his speech at an AICPA/International Accounting Standards Committee Foundation conference in New York about when the SEC proposal would be finalized, Kroeker said that “fall ends Dec. 21.” But in comments to reporters following his speech, Kroeker said he does not know the exact date the SEC will meet to finalize the plan.


For those eager to know specifics on if or when the SEC will require the use of IFRS, Kroeker pointed out that the proposed road map released for comment last November neither provides a date certain for IFRS adoption nor a guarantee that the SEC will adopt IFRS. The proposal provides seven milestones and a tentative timeline provided those milestones are met.


Kroeker said comment letters have shown that the vast majority of stakeholders support adoption of a single set of global standards but that convergence of U.S. GAAP and IFRS is a dominant concern along with roughly a dozen other issues not included in the road map, such as LIFO and tax accounting.


The IASB and FASB have been working since 2002 to arrive at a set of common standards by 2011. The convergence project began with The Norwalk Agreement reached between FASB and the IASB in 2002 and subsequent memoranda of understanding (MoUs) under which the two standard-setting boards have agreed to converge their separate sets of standards. Under the agreement, the boards are taking the best approach from either U.S. GAAP or IFRS or jointly developing entirely new standards where the current standards of neither body are deemed to be of sufficient quality.


Under the road map proposal, the SEC would decide in 2011 whether to require the use of IFRS. The 2011 decision point aligns with the Sept. 25 statement by the Group of 20 leaders that calls on accounting standard setters “to achieve a single set of high quality, global accounting standards within the context of their independent standard setting process, and complete their convergence project by June 2011.”


Kroeker, in his speech Friday, also referred to the G-20’s statements. “As we follow up this fall on the concepts in the [road map] proposal, it will be important that we, the FASB and the IASB use the term used by the G-20 in describing the convergence efforts; it will be important that we ‘redouble our efforts’ to seek global comparability,” he said.


The IASB and FASB appear to be following suit. During the AICPA/IASC Foundation conference Thursday, chairmen for both boards announced their decision to step up the frequency of their joint meetings to monthly to facilitate progress on their priority standard-setting projects scheduled for completion by 2011. These include joint projects on financial instruments, financial statement presentation, leases, liabilities and equity distinctions and revenue recognition, consolidations, derecognition and post-employment benefits.


Kroeker said that in his view the top three joint projects before the boards now are financial instruments, revenue recognition and consolidation.


Kroeker emphasized that accounting for financial instruments should focus on providing information to investors on whether and how to invest their money. “I believe it would be a serious mistake to take our focus off of investor needs for unbiased, transparent information in order to design what some have suggested are accounting standards that attempt to rectify the banking crisis,” he said.


Kroeker’s comments echo a Sept. 22 statement by the recently formed IASC Foundation Monitoring Board—a body that includes SEC Chairman Mary Schapiro; the chairman of the Emerging Markets Committee of the International Organization of Securities Commissions (IOSCO); the vice chairman of the Technical Committee of IOSCO; and the commissioner of the Financial Services Agency of Japan.


On the debate over fair value vs. historical cost valuation of financial instruments, Kroeker said, “it’s my personal view that it’s time to move beyond the debate over whether just fair value is relevant or cost is relevant. … It’s time to acknowledge that in some cases both sets of information are important and then how to portray that.”


For JofA exclusive video highlights of Kroeker’s speech, click here.


Matthew G. Lamoreaux ( is a JofA senior editor.


Where to find June’s flipbook issue

The Journal of Accountancy is now completely digital. 





Leases standard: Tackling implementation — and beyond

The new accounting standard provides greater transparency but requires wide-ranging data gathering. Learn more by downloading this comprehensive report.