A federal securities regulator on Thursday called for an end to the long-running debate over whether the United States should switch to global accounting standards, saying alternatives should be explored that incorporate the best of the U.S. rules.
In a speech at the Brooklyn Law School, Securities and Exchange Commission Democratic member Kara Stein laid out her position on accounting rules for the first time since joining the agency in 2013.
Her remarks took aim at a longtime debate over whether the SEC should phase out U.S. generally accepted accounting principles, or GAAP, in favor of international financial reporting standards or IFRS, which are used by more than 100 countries.
One option being explored at the SEC is whether to permit companies to report their financial statements using both sets of standards.
"I am not convinced of a need to abandon U.S. GAAP in favor of IFRS," Stein said in prepared remarks, noting that neither rule set is "perfect" and letting companies provide statements using two rule sets may confuse investors.
"To be frank, this debate between dueling standards needs to move on. Neither regime worked ideally in the financial crisis, and neither may serve investors well in today's post-financial crisis, technologically disrupted, and data-driven world," she said.
Stein added that the SEC should stop debating the merits of the two and instead approach the topic with a fresh eye toward incorporating modern technology and data into accounting regime.
"Now may be a good time to reimagine our approach globally," she said.
"We can adopt the best of what we have here in U.S. GAAP, in IFRS, and the best of the new thinking out there."
Under former SEC Chair Chris Cox, the SEC had appeared ready to embrace a move toward global standards. The effort lost steam, however, during the financial crisis.
Most observers had thought the matter was dead, until SEC Chair Mary Jo White revived the topic recently and instructed the agency's new accountant to come up with recommendations on the next steps.
