Does SEC chairman Christopher Cox have his bare feet packed in snow and ice?
Professor Lawrence A. Cunningham, of George Washiington University Law School, last night suggested in “Where’s the SEC?” that there is something substantial to be read into the SEC failing to open up the 60 day comment period on its proposed road map to IFRS. Mr. Cunningham suggests that SEC chairman Christopher Cox has cold feet!
The SEC formally announced its road map to IFRS on August 27, 2008. 29 days later, we are still waiting for it.
If Cunningham is correct, this is exceedingly good news for American investors. I am saying now in print for the first time that American investors stand to lose trillions if the U.S. switches corporate financial reporting from following U.S. GAAP to instead following IFRS. Large CPA firms will take a huge chunk of this vast sum (Jensen), but the major part of it goes to Europe in a massive wealth transfer.
Getting back to Cunnigham, how could the Cox delay be? Cunningham says:
First, Mr. Cox may have decided now is not the best time for the SEC to issue a Release that would be largely deregulatory and elevate managerial and auditor interests over those of investors and other users of financial reports. Second, Mr. Cox may believe that he should have unanimous Commission support for such a controversial Release. This may be more difficult now that he must work with a full slate of Commissioners, compared to earlier this year when vacancies existed. Some current Commissioners may side with investors and oppose the Release.
More important is Cunningham’s closing paragraph, in which he essentially says that the emperor has no clothes. His words are (emphasis mine):
Despite the SEC’s earlier exuberance, there no longer appear to be reasons for Mr. Cox to continue a quixotic campaign to move the US from its own to international accounting standards. For Mr. Cox, the consequence is being deprived of a legacy he sought. For investors, that would be a good thing too.
Well said. Very well said. There ought to be an award for such well-said remarks.
Of course, all of this is pure speculation. I wrote earlier that Mr. Cox has all the power here. Never-the-less, Republican presidential candidate John McCain’s threat to can his rear end may have taken some of his power away. Good for us.
Over and out – - David Albrecht
1 p.m. reality check. A friend just e-mailed to remind, “Resistance if futile!” He is correct, of course. The delay is undoubtedly meaningless.
Another friend, extremely well-connected, just e-mailed to say, “I understand that it’s likely the SEC proposal on IFRS will be released sometime next week. Of course, I heard that same thing about three weeks ago.”
5 p.m. CFO reporter Alix Stuart just got an article up, “IFRS Timetable Not on Time.” He has been in further communication with Cunningham. After reviewing comments of a few critics (including Niemeier), Stuart says:
Regardless of what has created the delay in publishing the timetable proposal, consensus is building that it may come too late for the timetable to unfold in its current form. “Even those who say a release is likely appreciate that there’d be a 60-day comment period, so it’s unlikely the SEC could turn around and do much,” no matter whether Cox finishes his term or resigns early, Cunningham said in an e-mail to CFO.com.
The coming turnover in the White House is likely to push out IFRS implementation far beyond the “date certain” that seemed so close in August. The next SEC chair will likely revise the proposal and call for “more detail, study and evaluation, which will take much more time,” says Cunningham.
So there you have it. It seems possible, but not conclusively so, to conclude that the transition to GAAP has been delayed a bit. However, I’ve promised to remind myself 1,000 times over, “Resistance is futile” before I get too enthused again.
We are IFRS, resistance is futile
Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile. Resistance is futile …
Over and out – - David Albrecht
Darla,
Of course I read you post, minutes after you published it. I have to admit, though, I didn’t clearly pick up your point at the time. I’m glad for this clarification.
I think that your post from last week may have prompted Cunningham to post on ConcurringOpinions.com
Dave
I would be very surprised if the SEC published the IFRS document for comment any time soon and commented on that last Friday in my blog. No response to my posting I began to wonder if I had stuck my neck out too far? I see that the discussion about the SECs IFRS position has picked up in the USA in recent days though.
We are still intent on implementing IFRS here in Canada in 2011. I was at a seminar on Tuesday and our regulators were speaking in very guarded terms like “if” the US converts and they “may not convert” – interesting. They reaffirmed that IFRS is a “go” in Canada. However, some 70% companies have not started converting yet in earnest.
I agree that it would be very difficult for even the most ardent supporter of IFRS to promote it during the credit crisis – outsourcing accounting principles to London? Well everything else seems to be outsourced these days. (Another T shirt idea?) A very funny parody can be found on the Jib Jab site – “Big Box Store” – a comment on outsourcing.
However, it should be noted that the SEC plans still for foreign issuers to continue to file with them using IFRS without reconciliation to US GAAP. I suppose even that could change?
“The IFRS Exorcist”