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State Board Report

December 2015

As a way for determining whether or not there is investor demand for IFRS (International Financial Reporting Standards) reporting, SEC Commissioner Michael S. Piwowar believes the Commission should consider allowing such financial reporting as a supplement without reconciliation to GAAP. Making his remarks at a November conference in New York, the Commissioner said this idea of the SEC’s allowing IFRS, rather than mandating it, was first suggested by SEC Chief Accountant Jim Schnurr almost a year ago.

"Foremost, I believe that any requirement for IFRS financial reporting should be investor-driven, not regulator-driven," Dr. Piwowar stated. Acknowledging his background as a financial economist, he observed: "It is difficult to gauge investor demand for financial reporting under IFRS by U.S. domestic issuers. How does one predict investor demand for IFRS reporting when it is largely not available in the domestic context?"

He summarized three observations made by Chief Accountant Schnurr in September: "First, there is ‘virtually no support’ for the Commission to mandate IFRS reporting for all issuers. Second, there is ‘little support’ for optional IFRS reporting for domestic issuers. Third, there is continued support for a single set of high-quality, globally accepted accounting standards."

Commissioner Piwowar believes allowing IFRS reporting as a supplement would provide "useful data on investor demand" for the SEC to analyze, and would also encourage the IASB and FASB to continue to work collaboratively on standards convergence projects.

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