SEC-Investors Friend, Fiend?-3

"The [SEC] signaled the demise of U.S. accounting standards, kicking off a process Wednesday that could ultimately require all publicly listed American companies to follow an international model instead. ... At the same time, investors worry it will create confusion, especially during the transition. Other critics worry that the international system offers too much wiggle room for companies, compared with the more precise rules enshrined in U.S. standards. ... Larger companies, especially those with overseas subsidiaries, have urged the SEC to move in this direction. They hope a single accounting standard will enable U.S. investors to more easily compare a retailer in the U.S. with one in France, for example. ... The proposal marks the capstone of Mr. Cox's push as chairman to lower global barriers for U.S. investors. ... It also stems from a concern, voiced more loudly before the credit crunch took hold, that Wall Street was losing business to overseas competitors. ... Skeptics, even those who agree with the concept of a common accounting language, called the SEC's approach wrongheaded. ... The U.S. accounting system, which is ingrained in textbooks, business schools and company treasuries, is based on detailed rules, while the international system expects companies to follow broad principles. ... Big U.S. accounting firms support the push to a single world-wide rule book, and say the transition will take years", my emphasis, Kara Scannell and Joanna Slater at the WSJ, 28 August 2008.

Uh oh, the: Big 87654, Fortune 500, Wall Street and SEC agree on something. Investors watch out. Imagine, this is the "capstone" of Cox's tenure as SEC chairman. When I was a wee little CPA, when dinosaurs still walked the earth, I favored principle as opposed to rules-based accounting. Why not? Accounting is the art of economic measurement. Within 30 months, it became obvious to me that principles-based accounting is subject to "Gresham's Law", i.e., bad accounting drives out good. That's why we have rules, so the gutless ones, i.e., Big 87654 partners are forced to tell their clients, "I love you, but here it is in black and white. You can't do it". Hey Mark Olson, what's your opinion of this? How will the PCAOB conduct its future firm reviews unders IFRS? That the Big 87654 favor this means their clients favor it. "Lower global barriers for U.S. investors"? Hahahaha! The Cox SEC has contempt for investors.