Corporate Governance

CII weighs in on Proposed use of IFRS

By Jason Cowart

With apologies to our readers, we just came across this letter, dated November 9, 2007, which was written by the Counsel for Institutional Investors ("CII") to the SEC concerning the proposal that U.S. issuers be allowed to file financial statements in accordance with International Financial Reporting Standards (?IFRS?).  We have blogged on this subject in the past and the CII?s letter provides an excellent overview of the issues.

In particular, the CII raises three concerns about the independence of the International Accounting Standards Board (?IASB?) ? the entity that promulgates IFRS ? that must be addressed before the SEC takes any action.  First, the current IFRS funding system must be replaced so that funding is reliable and the sources financing are not limited to a handful of organizations that represent only two ?constituents? ?companies and accounting firms.  Second, the IASB must have some autonomy from the EU (and governments in general), as the absence of such autonomy raises the possibility that accounting standards will be subject to the same forces that pervert governmental decision-making (i.e., political donations, influence pedling, local concerns, etc.)  Third, significant investor representation on the IASB is critical to ensuring that the IASB is truly independent.

We encourage you to read the CII?s thoughtful and insightful letter.

Full post as published by PomTalk on December 14, 2007 (boomark / email).