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State Board Report

November 2012

As he called for change in all areas of the accounting profession, Professor Paul Miller encouraged State Boards to take action. Addressing NASBA’s 105th Annual Meeting, held October 29-31, 2012 in Orlando, Dr. Miller told the State Boards: “I urge you to exercise your authority. I think many do not understand how important you are. It is your duty to define what is suitable behavior and to take appropriate action when it does not occur.”

Dr. Miller, who co-authors a regular column in Accounting Today and is a professor of accounting at the University of Colorado, said he is astounded that so few people in the profession understand that: “It is politics that shape how reporting standards are produced and enforced.” He sees accounting standards as officially supported minimums, and he contends that most accountants do not treat them as a floor, but as a maximum. “Minimum reporting has consequences: It leads to maximum risk, requiring maximum cost of capital.”

As for the goal of establishing a single high quality set of standards for financial reporting, Dr. Miller said, “It would be great if we achieve comparability – but reality is different from that. I love the vision – but it won’t work in practice.” The SEC’s lack of movement to International Financial Reporting Standards was because: “The real issue the SEC had to debate was the choice of whether the FASB or the IASB will do a better job of setting standards for public companies. Which system can do a better job in advancing American interests – and that goes well beyond accountants.”

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