FAF Recommends Condorsement to SEC
comment letter to the Securities and Exchange Commission recommending that the SEC adopt a condorsement approach to incorporate IFRS into the US financial reporting system.
The approach recommended by the FAF is somewhat different than the model of condorsement previously described by the SEC, but is similar in that the FASB would consult with the IASB as the IASB develops new standards and then would vote on whether to incorporate those new standards on a case by case basis. However, unlike the SEC model, in which differences with the IASB would be ‘rare’, the FAF model would only adopt IFRSs if the new standards were viewed as improving financial reporting quality.
FAF chairman John J. Brennan writes, “With these recommendations, the Financial Accounting Foundation makes clear its support for the incorporation of IFRS into U.S. GAAP.”
Commenting on the differences with the SEC’s approach, Brennan goes on to say “The trustees believe that the SEC’s staff paper of May 26 represents a sound path forward in moving the United States to a set of high-quality, globally comparable, international accounting standards. That said, we are recommending several important enhancements that we believe will improve the processes outlined in the SEC staff paper and, importantly, increase acceptance of the plan by constituents in the United States. The trustees’ recommendations would entrust to the IASB the primary role of creating new accounting standards applicable to the U.S. capital markets, while the SEC and the Financial Accounting Standards Board (FASB) remain active participants in the creation of those standards and the final arbiters of U.S. GAAP.”]]>