In proposing to let non-US companies report in IFRS (international financial reporting standards) without reconciling to US GAAP, and seeking comments on letting US companies choose which to use, the SEC made a tactical choice: it justifies both moves in the name of promoting global uniformity. This is a curious decision.
Hardly any serious, informed person actually expects people in all the different parts of the world to answer hard accounting judgments the same way, even if all apply the same written standards. So the SEC’s premise looks wrong as a practical matter.
In reality, the moves would open the possibility of head-to-head competition between FASB, the US standard-setter, and IASB, promulgator of IFRS. That may be appealing, at least for devotees of regulatory competition. Let more standard setters bloom. Let companies choose from the resulting garden of standards.
Is the SEC calculating that it will garner more support for its proposals in the name of “global uniformity” than it would in the name of “global competition”? How does this calculation square with the likelihood that discord, not harmony, is the more likely result?
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