In 2008, addressing an audience of accountants who were worried that the United States would adopt global accounting standards too fast, Christopher Cox said the end of U.S. GAAP and the full-scale adoption of International Financial Reporting Standards wouldn’t happen for “many, many years.”
Now former Securities and Exchange Commission chair Cox is saying the end has come, but not the end of U.S. GAAP — the end of any possibility of the United States ever fully adopting IFRS.
In a speech at the SEC and Financial Reporting Institute Conference in Pasadena, Calif., last Thursday, reported by Accounting Today, Cox declared that he had come to “bury IFRS, not to praise them.” According to Cox, too much time has gone by with little meaningful progress on adoption of IFRS, and “the high tide of American enthusiasm for IFRS has receded.”
Cox said the lack of progress in six years shows that public companies and investors were apathetic about adopting IFRS. “That’s why today there is not even a plan for expanding the voluntary use of IFRS, in the way that, for example, Japan has done,” Accounting Today reported him as saying.
As Accounting Today points out, it was the SEC, during Cox’s final year as chairman, that proposed a roadmap for transitioning to IFRS standards by 2014. That year, the SEC for the first time allowed foreign companies “to file their financial reports in IFRS with the SEC without reconciling them with U.S. GAAP.” But with the tenures of Mary Schapiro and her successors, the roadmap was not followed through on, as the SEC focused on other areas, like enforcement. (See “The Sterner, Stricter SEC,” in the June 2014 issue of CFO.)
IASB chairman Hans Hoogervorst issued a rejoinder to Cox’s statements, saying that “investors are best served by high-quality globally comparable information, and that includes U.S. investors.” Hoogervorst said the IASB and the Financial Accounting Standards Board were on the right track with their recent adoption of lease accounting reforms that make IASB and FASB more consistent.
On Tuesday, Win Bischoff, chairman of Britain’s Financial Reporting Council, also expressed optimism about the use of IFRS in the United States. “My own view is that we won’t get total harmonization, that is having one set of accounting rules and standards across the world,” Reuters reported Bischoff as saying, but “I could see that American companies would be given the choice over a period of time.”
Cox is currently a partner at law firm Bingham McCutchen LLP and president of its consulting business.