November 10, 2007
I feel that this article reflects a significant transition in thinking/policy that the SEC is experiencing which should benefit the United States. The SEC has been reluctant in the past to converge US GAAP with the International Financial Reporting Standards largely due, in my mind, to nationalism. I feel the idea of a panel predominately managed by foreign officials, determining what is "generally accepted" and mandating how US companies report their financial statements provides a sense of helplessness in enabling users to detect fraud. This sense of helplessness is magnified in an economy where fraud has not been an uncommon occurrence. The effects of Enron, Worldcom, and HealthSouth have created a sense of urgency to ensure American users the best possible information. Turning this responsibility over to foreign officials could be a frightening thing to do.
This statement shows a paradigm shift however in the SEC's thinking. Slowly but surely they are opening their minds to although might be initially uncomfortable, in the long run will benefit both American companies, investors, and the global economy. I think this reflects the SEC's ability to foresee the benefits that can be reaped from participating in the IFRS. These benefits are both from the investing point of view and the ability to continue contributing and being a leader in a global economy.