SEC Chair Mary Jo White called on the “next Chair” of the Commission to prioritize the development of “high-quality, globally accepted accounting standards,” which are “imperative for the protection of U.S. investors and companies and the strength of our markets”:
“I strongly urge the next Chair and Commission to build on our past efforts and give the goal of high quality globally accepted accounting standards the focus and support this critical issue deserves.”
In a public statement, Chair White noted that as of September 2016, foreign companies that apply International Financial Reporting Standards (“IFRS”) in SEC filings represent “a worldwide market capitalization in excess of $7 trillion across more than 500 companies.” U.S. companies use IFRS in making acquisitions, establishing joint ventures and preparing financial information for management and boards of directors, she stated.
“In light of these global realities,” Chair White urged the “next SEC Chair” to:
- work with the Financial Accounting Standards Board (“FASB”) to “provide clear and reliable financial information as business transactions and investor needs continue to evolve globally”;
- work closely with the SEC Chief Accountant and be an active member of the IFRS Foundation Monitoring Board; and
- ensure that the SEC carefully monitors “how the needs and interests of investors and issuers may change in the future and seek opportunities to guide and accelerate the development of high-quality, globally accepted accounting standards.”
In addition, Chair White encouraged the IFRS and the Financial Accounting Standards Board to “continue their productive collaboration,” particularly by adopting a “sequential” approach to the convergence of their respective accounting standards.
Lofchie Comment: Some of the most unfortunate incidents that occurred during Chair White’s tenure were the recurrent attacks she suffered under Senator Warren’s acerbic scrutiny. Those attacks were wholly undeserved, since the Senator’s objective was to compel the SEC to focus on adopting rules that had a significant political purpose (such as the disclosure of political contributions) but only tangential relevance to the SEC’s aims, as opposed to rules that should be more important to the SEC, such as those that improve economic transparency. (See, e.g., Senator [Warren] Urges President to Replace SEC Chair.)
To Chair White’s credit, she did not allow these attacks to distract the SEC from pursuing its core mission. Even in her parting words to the Commission, Chair White fixed her attention on the task at hand: improving economic disclosures that may benefit investors and the U.S. economy.