Square-Off: Is Raising the Minimum Wage a Good Idea?
Raising the minimum wage won big last November. A handful of states passed legislation to significantly hike pay floors across the country, which may represent a building sea change in public opinion away from business interests. From New York City to Seattle, the "Fight for $15" is increasingly becoming a reality. Twenty-nine states and the District of Columbia now have higher minimum wages than the federal mandate of $7.25 an hour. Advocates of the hikes say the wage floor has lagged far b ..
While the Securities and Exchange Commission continues to procrastinate on a decision about whether publicly traded U.S. companies must file financials using International Financial Reporting Standards, an international group has given the regulator a nudge.
Last week the group that monitors the International Accounting Standards Board made a change in the types of entities that can oversee the IASB. Starting in 2013, qualifying members will need to mandate “domestic use of IFRSs in [their] jurisdiction’s capital market,” the IFRS Foundation Monitoring Board stated. The SEC has not yet mandated domestic use of IFRS.
The monitoring group will assess its current membership next year after defining “use of IFRS,” however. Theoretically, the SEC’s current rule allowing some SEC registrants based outside the United States to file IFRS-prepared financial statements rather than GAAP financials could be deemed sufficient to preserve the United States’s membership in the monitoring group. The group will also require members to make financial contributions.
The new membership criteria could be interpreted as “a gentle hint” to the SEC to move forward with an IFRS plan, says Joel Osnoss, global leader of IFRS clients and markets for Deloitte Touche Tohmatsu. Otherwise, the SEC could wind up with no say in how the IASB operates.
Currently, the SEC is a member of the monitoring group through its membership in the International Organization of Securities Commissions. Financial institutions such as the World Bank and other regulators like the European Commission are also members.
The SEC has delayed deciding on an IFRS plan since it proposed a road map in 2008 for all U.S. companies to move to IFRS. Last May the SEC released a staff paper exploring a new framework for adopting IFRS in the United States called “condorsement” (which combines the words convergence and endorsement).
Under that concept, the IASB and the U.S. Financial Accounting Standards Board would continue the ongoing process of converging their rules over the next few years, until eventually FASB’s role would be to merely endorse the joint rules.
The SEC was one of the early supporters of creating the IFRS monitoring group, which for the past three years has been responsible for approving the appointment of trustees and reviewing the IASB’s oversight activities and budgeting and funding mechanisms. The IASB previously acted autonomously, without the equivalent of an SEC looking over its shoulder. (The IASB declined to comment for this article.)
Even with revised membership criteria, the IASB’s overseer doesn’t have enough accountability for some observers’ tastes. The SEC may use the revised criteria to mollify investor advocates and other critics who fear the IASB may not issue standards that protect investors, suggests one longtime IFRS critic, financial reporting and management consultant Tom Selling. But, he adds, the new missive from the IFRS Foundation Monitoring Board does not clarify the extent of the IASB’s independence or to whom it is accountable.
Moreover, Selling says, even if the SEC ultimately is deemed qualified for membership in the oversight group, the American regulator’s role could be diluted if the group, as planned, adds up to four new members.
Still, the United States appears to still hold significant sway. “Until you have the SEC at the table, you don’t have truly global standards,” Osnoss says.
And the IASB clearly wants the United States represented, as IASB chairman Hans Hoogervorst has been saying in various speeches that the SEC will adopt IFRS. “The U.S. will ultimately come on board,” he said during a January seminar. “Quite simply, they need us and we need them.”