July 17, 2018

FASB Supports the SEC’s Commitment to Tiptoeing Around IFRS Adoption Indefinitely

This week, the AICPA Conference on Current SEC and PCAOB Developments is going down in Washington and unfortunately I am missing it this year as I'm due in Dallas this week for AccountingWEB Live which is exponentially more exciting (or something).

Today, SEC Chief Accountant Jim Schnurr reiterated the commission's commitment to pussyfooting around any real action on convergadoption of IFRS in the U.S. by kicking off his speech with a reminder that they are totally still working on it, guys:

In May of 2014, Chair White spoke to the Financial Accounting Foundation and highlighted that having the Commission focus on IFRS was, and would continue to be, a priority for her.  Chair White noted that international regulatory and accounting constituents continue to want clarity on what action, if any, the Commission will take regarding the further incorporation of IFRS into the U.S. capital markets, and she was hopeful that the Commission would be able to provide that clarity sooner rather than later.

No, like actually working on it. Not today or anything but soon, everyone, soon:

When I arrived at the Commission two months ago, Chair White asked me to take a hard look at where the staff had been on the issue and make a recommendation to her as to the path forward.  Before discussing where the OCA staff is and where I hope to lead us in the near future, I would like to emphasize a couple of points.  I strongly support the overarching goal of providing investors with high quality decision-useful information to allow for informed investment decisions that facilitate capital formation.  And, as the Commission envisioned in its statement in 2010, we continue to strive for high levels of comparability, as is practical, between financial information provided for domestic and international issuers.  While these goals remain at the forefront, Chair White and I both recognize that any continued uncertainty around IFRS results in uneasiness for investors across the globe. Therefore, it is a priority of mine to bring a recommendation to the Commission in the near future with the hope of resolving, or at least lessening, this uncertainty.

Although actual action is non-existent as usual, the Financial Accounting Foundation released a statement today endorsing whatever it is the SEC is doing:

“We agree with Chief Accountant Schnurr that U.S. investors are best served by an independent standard setter that is first focused on the interests of those who participate in U.S. capital markets.

“We also believe it makes sense to explore whether there are ways to remove barriers that might exist for companies that voluntarily choose to offer investors a second set of financial statements prepared in accordance with International Financial Reporting Standards (IFRS).

“We believe that voluntarily providing IFRS information on a supplemental basis, subject to audit, SEC review and other regulatory scrutiny, could be an important tool in fostering further convergence of Generally Accepted Accounting Principles (GAAP) and IFRS.”

Wouldn't it be a lot easier if they'd just admit this isn't going to happen and move on or are we asking too much here?

Perhaps the best part of Schnurr's speech was the jab he included against the PCAOB for taking its sweet time on auditing standards.

Over the last several years SEC Chairs, Commissioners, Chief Accountants, and my Deputy Chief Accountant for the Professional Practice Group, Brian Croteau, whom you will hear from shortly, have all publicly encouraged the PCAOB to accelerate the pace of standard setting.  Notwithstanding these efforts, some of the most important projects to update auditing and quality control standards that are on the PCAOB’s agenda simply have been moving too slowly.   Considering the lack of progress on a number of projects, I have questioned what might be the root cause or causes with respect to the PCAOB standard setting process.

Coming from the agency that hasn't been able to come to a real conclusion since the IFRS roadmap was introduced six years ago, that's pretty rich. But hey, these things take time and we all just have to be patient.

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Madoff Feeders Getting Some Unwanted Attention

The SEC, feeling confident these days, has filed a complaint against Cohmad Securities Corporation and its Chairman, Chief Operating Officer, and one of the brokers, saying they “actively marketed Madoff investments while ‘knowingly or recklessly disregarding facts indicating that Madoff was operating a fraud.'”
Call us Captain Obv but that sounds like they were either dumb or in on the scam. Either way, they can’t be too psyched about it.
An additional complaint has been filed by the SEC against Stanley Chais, an investment adviser who put all of the assets he oversaw into casa de Madoff.
Irving Picard, who might have the most thankless job in America, also sued both Cohmad and Chais, because, you know, a few people want their money back. The trustee’s complaint against Cohmad spells it out:

The trustee’s lawsuit asserted that fees paid to Cohmad by Mr. Madoff were based on records showing the actual cash status of customer accounts — the amounts invested and withdrawn — without including the fictional profits shown in the statements provided to customers. When a customer’s withdrawals exceeded the cash invested, Cohmad’s employees no longer earned fees from that account — even though the customer’s statements still showed a substantial balance, according to the lawsuit.

This arrangement indicated that Cohmad and its representatives knew about the Ponzi scheme and knew that the profits investors were allegedly earning were bogus, according to the trustee’s complaint.

Good luck explaining that.

Brokerage Firm and 4 Others Sued in Madoff Case
[New York Times]

FASB Overseers Hope That Motley Crue-ish Tour Will Help Win Some Fans Back

Motley Crue.JPGThe Financial Accounting Foundation (“FAF”) trustees are going on a tour that will certainly rival the amount of groupie tail that Motley Crue was getting circa late 80s.
“The Financial Accounting Foundation trustees, who oversee the U.S. Financial Accounting Standards Board (FASB), will meet with small closed discussion groups of investors, auditors, academics and regulators in New York, Dallas, San Francisco, Chicago and Washington, D.C., as well as with the FASB’s standing advisory groups.”
It’s pretty clear that the FAF has the intention of spreading their seed knowledge around the country in order to win back some cred for the FASB.

FASB overseers to seek input on new strategic plan
[Reuters via Accountancy Age]