Former SEC Chair Chris Cox Goes From Cheerleading IFRS Adoption to Burying It

By | 3 years ago

Before we talk about Chris Cox's recent comments on adoption of international standards in the U.S., allow us to look back. After all, you will recall Cox was the one pushing for them years ago when he was still chairman of the SEC. Let's see what he said at an SEC Open Meeting in August of 2008:

Fortunately, we won't have to wait nearly as long for the language of business and finance to converge. One of the more revolutionary developments in the world's capital markets is the remarkably quickening pace of acceptance of a true lingua franca for accounting.

The world's capital markets have long searched for a single set of high quality accounting standards that could be used anywhere on earth. An international language of disclosure and transparency would significantly improve investor confidence in global capital markets. Investors could more easily compare issuers' disclosures, regardless of what country or jurisdiction they came from. They could more easily weigh investment opportunities in their own countries against competing opportunities in other markets. And a single set of high-quality standards would be a great boon to emerging markets, because investors could have greater confidence in the transparency of financial reporting.

He said the exact same line at a March 2008 address to the Annual Conference of the International Organization of Securities Commissions:

But despite the convenience of being able to speak to people from other countries in French or in one of the world's other more common languages, such as the English I'm using today, the truth is that in the 21st century the world is still a very multilingual place. Today, the top ten languages in the world by number of speakers are Mandarin Chinese; English; Hindustani; Spanish; Arabic; Russian; Portuguese; German; French; and Japanese. And every one of these languages is spoken by over 100 million people. It may be a very long time indeed before the world's 6.5 billion people can all speak in the same tongue.

Fortunately, we won't have to wait nearly as long for the language of business and finance to converge. One of the more revolutionary developments in the world's capital markets is the remarkably quickening pace of acceptance of a true lingua franca for accounting.

Back to present day. Perhaps it's because Cox is no longer heading up the SEC so he's off the leash and able to say things like this now. Make no bones about it, Cox is sure IFRS adoption is dead in the U.S. Deader than dead. So dead it's already been embalmed and just needs to be buried. The scoop from Compliance Week:

American capital markets simply can't be served by the international accounting rulemaking process, making it clear that International Financial Reporting Standards won't be adopted in the United States “in our lifetime,” said Chris Cox, former chairman of the Securities and Exchange Commission.

In a candid dissection of the history of the convergence movement and how it derailed, Cox said during a keynote speech at an SEC conference in California last week he's not interested in promoting U.S. adoption of International Financial Reporting Standards in the United States. “Today, I come to bury IFRS, not to praise them,” he said. “The fact is, far too much time has gone by with no meaningful progress. I think we have to fairly conclude that the moment has passed. Full-scale adoption of IFRS in the United States might once have been possible, but it is no longer. This is not a prognosis. It's just a statement of fact.”

Cox also mentions in that speech that getting English-speaking people to learn Spanish or rebuilding global communication after the Tower of Babel fell is easier than getting everyone to agree on a single financial reporting language. For real:

Organizing the entire planet behind an idea as big as a universal language of financial reporting takes enormous effort, and a constant commitment. Endless reasons can easily be marshalled for why it can't be done, and they are always relentlessly tugging away at the enterprise.

He doesn't blame the SEC for dropping the ball — nor should he, as the ball happened to be in his court for much of the time the SEC has been hard at work heel-dragging toward convergence — but does say that the IFRS excitement has passed. Too late to get it back. Forget it. Move on.