Christopher Cox’s comments last week about the need for a “public policy oversight body” to watch over the International Accounting Standards Board are in sync with what the board’s trustees already have in mind.
The remarks by the Securities and Exchange Commission chairman, in an interview with the Wall Street Journal, signaled how seriously America’s regulators are considering International Financial Reporting Standards as a potential replacement for U.S. generally accepted accounting principles. The remarks also indicated that the U.S. plans to make sure that it has an important role in shaping the future of those standards.
“The comments by SEC chairman Cox on the establishment of a public policy oversight body are also broadly in line with our published proposals,” Mark Byatt, IASB spokesman, told CFO.com.
The IASB, which is now overseen by the International Accounting Standards Committee (IASC) Foundation will hold a roundtable discussion later this month to discuss a proposal to change its current constitution. As a growing number of countries have adopted IFRS, the international standard-setter has recognized its need to become even more global and to establish clear authority over the accounting rules that it governs.
In a draft proposal the IASB gives an assessment of how a “monitoring group” would work to give the international standard-setter public accountability. The group would consist of a member of the European Commission, the managing director of the International Monetary Fund, the chair of the International Organization of Securities Commissions, the chair of IOSCO’s technical committee, the commissioner of the Japan Financial Services Committee, the chairman of the SEC, and the president of the World Bank.
“The Trustees understand that the IASC Foundation’s unique structure makes demonstrating public accountability more challenging than it would be for a national standard-setter, which normally reports to national regulators, governments, or parliaments,” the proposal said. “There will be growing needs to monitor the use and rigorous application of the standards.”
Among the monitoring group’s tasks will be appointing new members to the IASB, reviewing how the board operates, and ensuring that it has proper funding. Meanwhile, the IASC will receive formal input from international “stakeholders” such as policymakers and private sector institutions. In the proposal the IASB would also expand from 14 members to 16 members to achieve broader geographic diversity. In recognition that more influential countries might try to rig accounting in their favor, members would be asked to pledge to put the goals of the IASB above their own interests.
Any changes to the IASC constitution would not take effect until 2010, but international regulators appear to be ready to coalesce earlier than that. Just last month the SEC signed agreements to share information on international accounting standards with authorities in Belgium, Bulgaria, Norway and Portugal. And last week the SEC reached an agreement with Canada’s regulators on “mutual recognition.” The agreement would allow Canadian securities exchanges and certain other Canadian financial service providers more freedom to operate in the US while remaining under Canadian regulatory oversight.
“As American investors and companies increasingly demand seamless cross-border access to information and capital, the SEC is striving for seamless high-quality regulation across borders,” Cox said last month. “These new avenues for cooperation and coordination represent an important step in our pursuit of that goal.”