In
a JofA interview, Bunting, a partner in Seattle-based Moss Adams LLP and a former
chairman of the AICPA, further explained what he means by now. The SEC’s
proposed road map (click to read) for the adoption of IFRS is “doable” as are the road maps of Canada, China and Japan, he said.
“The
problem in the U.S. is the lack of clear commitment to the road map from the new leadership at the SEC,” said Bunting.
“They haven’t come out and said ‘We are committed to the road map; we may move the dates around a little
bit, but we know where we’re going.’ So for the United States, the issue is to confirm the destination, not so
much the timing, but the destination.”
Market,
rather than political, forces will drive the use of global standards in the U.S., according to Bunting. “A significant
portion of U.S. companies will be reporting under IFRS no matter what the SEC decides,” he said.
But
Bunting cautions that lack of action by the SEC could create a significant burden on U.S. businesses, their stakeholders and
the accounting profession. “Unless the SEC commits to a road map, we’re going to be a bilingual country in terms
of financial reporting,” he said. “And there’s nothing [the SEC] can do to keep that from happening unless
they commit to the same language that the rest of the world will be operating in.”
In
his remarks to the World Bank, Bunting also pointed out that small and medium-size entities and micro-entities require special
attention. IFRS for private companies (nonpublicly accountable entities) may or may not be adequate today, according to Bunting.
“What’s
important is that [IFRS for private companies] represents a commitment that ‘one size fits all’ does not apply
in standards and that recognition has to be given to the special needs of smaller enterprises,” he said, further emphasizing
that standards should be for accountability and transparency to help the functioning of the markets. “They should not
be obstacles to the creation … or the growth of small businesses.”
The
U.S. should be more committed to the development of IFRS for private companies, according to Bunting. “I believe that
if the Unites States were to commit to this notion and it gains more traction in other markets, that it would become the standard
for private entities, not micro enterprises, but private, small-medium enterprises that have a moderately sophisticated reporting need,” he said.
While
IFAC—with 158 member bodies in 123 countries and jurisdictions—is known for its work in establishing international
standards for auditing, education, ethics, and public sector accounting, Bunting pointed out that the organization has recently
changed its strategy in light of the economic crisis so that it can be more involved in driving for quality implementation
of standards.
“If
you want quality implementation in any country, including the United States, of auditing and ethics standards and even financial
reporting standards, there are multiple parties that have to come together in the game plan.” said Bunting. “We’re
the only organization in the world that has the kind of structure that makes it possible to set a standard and then obligate
multiple participants around the world to use it. That positions us very uniquely to help with the implementation process.”
Bunting
identified three key groups that IFAC works with to facilitate the implementation of global standards.
The
first group is IFAC’s national member bodies like the AICPA, which Bunting says are critically important because of
the training they provide, their support for the standards and the forums they create in order to help the profession deal
with the standards and identify problems.
CPA
firm networks are also under the IFAC umbrella through an IFAC organization called the Forum of Firms. “Firms have to embrace the standards, and the implementation occurs through the firms,” says Bunting. “The
firms that belong to IFAC through the Forum of Firms are committed to implement IFAC auditing standards globally everywhere
unless they are required by the country to use another standard. The major global firm networks also have IFAC’s International
Standard on Quality Control 1 integrated into their transnational audit manuals and their training. They use IFAC standards
for independence globally, and they do that, in part, because it makes sense and, in part, because it’s their commitment
as members of the Forum of Firms.”
Finally,
national regulators oversee the IFAC standard-setting process through the organization’s Public Interest Oversight Board.
