US Ready to Adopt Global Accounting Rules: James Kroeker
Financial regulators in the US could finally be ready to switch the financial reporting measures for US companies to the globally accepted standards for accounting, said the chief accountant at the US Securities and Exchange Commission on Monday during an interview with Reuters.
James Kroeker said that while the SEC had yet to make a recommendation in regards to the recommended accounting principles, he was "optimistic" that a model could eventually be reached that would facilitate the transition between accounting rules.
Presently, US companies adopts the GAAP (Generally Accepted Accounting Principles) set of accounting rules when they report financial statements each year. However, most companies worldwide now use the IFRS (International Financial Reporting Standards) as their accounting system, which tends to allow for more flexibility and judgement than the GAAP.
According to the Wall Street Journal, American corporations have long waited for a recommendation from the SEC to switch to the IFRS, particularly as it would unify companies worldwide under the same accounting system.
Kroeker noted that while the SEC had been drafting proposals to switch to the IFRS since 2009,the SEC had to delay its decision due to the more urgent work of fleshing out the Dodd-Frank act.
Kroeker said that he would likely make a proposal to SEC commissioners for the switch in the "coming months", with the crucial details to include on how the US could make the switch without compromising on accounting practices for smaller firms as well.
"Having a model thatworks for everyone, even if there is a delay in timing, is important, otherwise you ingrain the idea that the smaller companies will never have to change and you end up with a two GAAP system permanently in the US," said Kroeker.
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Kroeker's statement has already been greeted positively by the IFRS's founders, the International Accounting Standards Board (IASB) - based in London, England. The IASB was responsible for developing the IFRS, as well as for the promotion in the use and application of these standards.
"It was a very solid and confidence-boosting statement. I think they are on the right track,"said IASB chairman Hans Hoogervorst of Mr. Kroeker's remarks.
