May 13, 2015

IFRS: Dead in the US?

Here’s an excerpt from this article:

Sounding a death knell for the more-than-decade long effort to fully “converge” International Financial Reporting Standards with U.S. Generally Accepted Accounting Principles, James Schnurr, the chief accountant of the Securities and Exchange Commission, said that he probably won’t recommend that the SEC should mandate IFRS or that U.S. companies should have the choice of preparing their financials under those standards.

Speaking at the 14th annual Baruch College Financial Reporting Conference in New York City, Schnurr said that “there is virtually no support to have the SEC mandate IFRS for all registrants.” Further, he said, “there is little support for the SEC to provide an option allowing [U.S. public] companies to prepare their financial statements under IFRS.” Since 2007, the commission has permitted foreign private issuers in the United States to report their financials under IFRS without reconciling them to U.S. GAAP. (Under the pre-2007 regime of reconciliation, foreign issuers had to identify and quantify the material differences they reported under IFRS in terms of U.S. GAAP.)

However, he added, “there does seem to be continued support for the objective of a single set of high-quality globally accepted accounting standards.” The chief accountant stressed that the U.S. Financial Accounting Standards Board and the International Accounting Standards Board continue to communicate and keep each other’s views very much in mind when each considers its own actions.

Schnurr bemoaned the current emphasis on the deterioration of relations between FASB and IASB. “The conversation seems to quickly transition to convergence, or the lack thereof, often with an adversarial, U.S. GAAP vs. IFRS, tone. Conversations on this topic typically highlight the differences and shortfalls in the efforts towards convergence in an attempt to suggest that the two sets of standards will never be able to achieve uniformity,” he said.

PCAOB Issues “Audit Committee Dialogue”

Last week, the PCAOB issued this “Dialogue” report – addressed to audit committees – that highlights key areas of recurring concern in PCAOB inspections of large auditors as well as certain emerging risks to the audit. As noted in this Cooley blog, the report also provides targeted questions that committee members may ask their auditors on each topic.

Delaware Senate Passes Fee-Shifting Bill (Now on to the House)

Here’s news from this Delaware Online article:

Lawmakers in the Delaware Senate voted 16-5 on Tuesday to approve legislation that would ban corporations from adopting bylaws that impose corporate legal costs on shareholders who file unsuccessful lawsuits. The fee-shifting legislation has been controversial, attracting opposition from the U.S. Chamber of Commerce. The Chamber says the legislation protects frivolous shareholder litigation and threatens Delaware’s business-friendly image. “Companies that incorporate in Delaware have valued the state’s clear and fair corporate law principles,” said Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform. “But they are increasingly becoming victims of ‘extortion through litigation.'” More than nine of every 10 corporate mergers or acquisitions are challenged in court.

The Delaware State Chamber of Commerce remained neutral on the legislation, which is sponsored by Delaware Sen. Bryan Townsend, a Newark Democrat and a practicing corporate lawyer at Morris James in Wilmington. In May 2014, the Delaware Supreme Court upheld a bylaw adopted by a private non-stock corporation, ATP Tour Inc., that shifted legal costs onto the loser in shareholder litigation. Delaware lawyers, concerned that stock corporations could seek similar bylaws, recommended that the General Assembly change the law to ban such bylaws.

The legislation now heads to the Delaware House of Representatives.

Meanwhile, here’s two blogs by Allen Matkins’ Keith Bishop:

It’s Time To Put A Stop To Fee-Shifting (But Not In the Way You Might Think)
Here’s One Way To Recover Attorneys’ Fees Without Adopting A Fee Shifting Bylaw

– Broc Romanek