House Financial Services Committee Permits IFRS Use--At Least, for Foreign Companies

The support of Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke for convergence between IFRS (International GAAP) and SFAS (US GAAP) was critical during a House Financial Services Committee meeting regarding SEC funding. Committee Chair Michael Capuano (D-MA) was initially skeptical of convergence and was considering an amendment forbidding the Securities and Exchange Commission from allowing an international body from establishing accounting standards for companies in U.S. financial markets. After hearing the support from Bernanke and Paulson, Capuano dropped the amendment and the original motion to strengthen SEC enforcement procedures passed by voice vote by the Financial Services Committee.

All eyes await the initial IFRS-based financials to see whether such statements will meet the needs of stakeholders (perhaps even improving the reporting process). One side note--at a time when financial reporting appears to be heading in a principles-based direction (IFRS is supposed to be more principles-based than present U.S. GAAP), it seems strange that some state boards of accounting are going in the opposite direction for continuing ethics education and pushing rules-based approaches such as state-specific requirements for the new ethics CPE requirements.