International regulators should make sure that companies, auditors, and the European Union do not have undue influence on international financial reporting standards before the U.S. considers adopting them, the Council of Institutional Investors (CII) wrote in a Nov. 9 letter to the U.S. Securities and Exchange Commission.
"[A]t least three related … issues should be resolved as soon as possible and certainly before the [SEC] considers allowing U.S. issuers to prepare financial statements in accordance with [International Financial Reporting Standards]," CII General Counsel Jeff Mahoney wrote in the letter. These issues include the funding sources for the International Accounting Standards Board (IASB), the European Union's influence over the approval of standards, and the lack of sufficient investor representation on the IASB's 14-member board.
The SEC is considering allowing U.S. companies to use International Financial Reporting Standards (IFRS), the accounting rules set by the IASB, in addition to, or instead of, the Generally Accepted Accounting Principles (GAAP) that are used in the United States. On Nov. 15, the SEC voted to drop rules requiring foreign firms listed in the U.S. to reconcile their financial reports with GAAP.
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