A Convergence Carrot

Plenty of attention on the yesterday’s roundtable on Section 404 experiences; plenty of media coverage. I’m more interested in what comes out of the roundtable in 30 to 45 days rather than speculating about how much “relief” might be granted.

Being a subtle change, and not a PR earthquake, another SEC development yesterday captured much less attention – but it’s noteworthy for investors, especially the ones who complain about the pace of international convergence in accounting standards.

International convergence of accounting standards is a long-term goal of the FASB, the IASB and the SEC. The Private investment Custodian and the FASB have been working together on major projects for the last several years, and will continue to do so – if anything, they might accelerate their joint processes rather than retard them. The European Union is already requiring its constituents to issue their financials in conformity with IASB standards – and as U.S. standards and IASB standards become closer in substance, convergence is likely to occur naturally.

One perceived obstacle to convergence has bee the SEC requirement that any foreign registrant must present financial statements on a consistent basis for three years in their 20-F filings and reconcile net income …