White urged Jay Clayton, the incoming chair of the SEC and its other commissioners ‘to speak again on this issue and agree on a path forward to most effectively advance this critical objective’, believing that it is imperative for the protection of US investors and companies, and the strength of US markets.

The statement includes a discussion of the work the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) have done on convergence, as well as other key activities undertaken in the pursuit of considering globally accepted accounting.

White notes that it is ‘now clear that US GAAP and IFRS will continue to coexist in our public capital markets for the foreseeable future, it is just as clear that the efforts to enhance the respective standards and to reduce differences between them should continue’.

The US operates under US GAAP which is used with some aspects of IFRS however, the SEC wants IFRS to become more prominent and independent, although attempts to produce converged standards on revenue recognition and leases has not been wholly successful, with both accounting standards boards taking slightly different approaches to IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases.

White said: ‘While US constituents have advised us that they do not support a move to, or an option to use, IFRS for financial reporting by US companies at this time, this does not lessen the importance of their engagement on IFRS or in the broader work to further enhance globally accepted standards.’

US investors currently make investment decisions using financial statements of foreign companies that apply IFRS issued by the IASB. White said: ‘US companies also rely on IFRS financial statements when entering into transactions with non-US companies and other parties that apply IFRS. 

‘Still other US companies look to IFRS when preparing financial information for management and boards of directors. US multinational companies with subsidiaries outside the United States are also often permitted – or required – by other countries to use IFRS for statutory financial reporting requirements for those subsidiaries.’

White cautioned that the US ‘cannot afford to be myopic about this issue in light of the benefits of these efforts for all stakeholders. Strong support of both the FASB and the IASB by US investors, companies, auditors, and others, including the Commission, is essential.

‘Indeed, it should be self-evident that the pursuit of high-quality globally accepted accounting standards is part of the SEC’s continuing responsibility to encourage, facilitate and direct efforts to enhance the quality of all financial reporting that directly impacts the protection of investors and the strength of our markets.’

White’s statement from the SEC is available here.

This article first appeared in Accounting Research Manager (ARM) Special Alert, published by Wolters Kluwer US. Additional reporting by Amy Austin