Accounting Today - October 2011

the standard-setter for public and non-public entities. Specifically, 50 states plus five other agencies license CPAs and bar them from producing and auditing reports that don’t comply with FASB standards. (We’ll return to this point momentarily.)

So, even if the SEC could make IFRS mandatory, which it cannot (see below), that action would not displace GAAP.

7. The SEC can adopt IFRS for
U. S. public companies.

FALSE. The U.S. Securities Acts charge the commission with creating acceptable accounting principles for public filings. Sarbanes-Oxley explicitly requires the commission to designate, oversee and fund only one private standard-setting body. This irritating detail has been overlooked by a great many, perhaps including some at the commission.

Because the IASB will clearly not submit to commission oversight or depend solely on U.S. funding, what, then, would it take to amend these statutes? Congress must be persuaded that the SEC should no longer influence accounting principles applied by issuers of securities traded in U.S. markets. To get there, one of two things would have to happen.

First, Congress would need to be legitimately convinced that relinquishing this authority would advance the interests of the American populace, which is not even remotely true.

Second, PAC fund contributions from interested parties might illegitimately persuade individual members to vote to amend the statutes. Doubtlessly, that approach would be completely despicable.

8. “Condorsement” is a legiti-
mate path to IFRS adoption.

FALSE. In light of these obstacles to changing the laws, some SEC staff have suggested they can be evaded by (wink, wink) keeping FASB as the designated body while compelling it to rubber-stamp every past and future IFRS.

As we explained in August, this idea is an unwise and illegitimate pretense because it would cause

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the SEC to forfeit its influence on standard-setting. Further, we’re very confident this scheme isn’t actually legal. Even if not against the letter of the law, it’s obviously contrary to legislative intent and the public interest.

Further, it’s unethical, beneath the commission’s dignity, and contrary to its mission and history.

9. Everyone in the U.S. loves
IFRS.

FALSE. Upon reading most of what’s printed, you’d think everybody is dying to make the IASB the U.S standard-setter. It just ain’t so!

Many have forgotten that the original SEC “Roadmap” from November 2008 proposed authorizing the 20 largest public companies to apply IFRS for public filings after 2009. Of course, the map was never implemented, but have those companies’ managers whined that they haven’t been able to use IFRS? Not at all.

Additionally, most don’t realize how much the leaders of the National Association of State Boards of Accountancy are opposed to adopting IFRS and the IASB.

On July 7, 2011, director-at-
large Gaylen Hansen thoroughly
condemned this idea at the SEC’s
roundtable on condorsement
when he said: “Convergence sim-
ply for the sake of convergence
is not a good idea. Further, con-
vergence based on compromise
represents acceptance of medioc-
rity, inconsistent with any claim
to high-quality standards.” He un-
leashed this powerful conclusion:
“A beauty contestant’s naive quest
for a world of peace and harmony
is understandable, even admirable.
However, weakening oversight of
our own standards is neither, and is
clearly not in our national interest.
[That] we would impose this upon
ourselves, without compulsion, is
even more remarkable.”
Remember, this outspoken op-
ponent is a leading member of the
body that would have to persuade
55 licensing agencies to endorse
the IASB.

10. Adopting IFRS in the U.S. is
inevitable.

FALSE. We can’t tell you how
many times we’ve seen the conde-
scending phrase, “It isn’t a question
of whether the U.S. will adopt IFRS,
but when.” This statement is either
pure propaganda or unadulterated
naiveté.

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WE’RE GOING ALL IN

We’re challenging the lobbyists to rise to a higher level of responsibility. In the vernacular, we’re calling their bluff. It’s way past time for them to honor the truth, instead of disingenuously repeating falsehoods to our profession and the business world.

Further, it’s time for the SEC commissioners and staff to get a firm grip on reality and just say “No” to IFRS and the IASB and stop encouraging false expectations and additional propaganda.

As for accounting’s rank-and-file, we call on you to step up to your ethical responsibilities to think for yourself and reject these 11 phony claims. AT

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