SEC Chair Threatens Global Companies’ Accounting Flexibility (3)

SEC Chair Paul Atkins threatened Wednesday to reconsider a nearly two-decade-old decision allowing global companies to rely on international accounting rules when reporting their results to US investors.

Efforts to craft global climate reporting rules risk diverting resources and attention away from setting accounting rules that investors depend on, Atkins said according to prepared remarks to an Organization for Economic Cooperation and Development event in Paris.

The IFRS Foundation oversees the work of both the International Accounting Standards Board and a more recently created sister body that sets sustainability reporting rules.

Atkins, a Trump administration appointee, urged the foundation to provide “stable funding” for the accounting board and prioritize its work “rather than specious and speculative issues.”

“The IASB must promote high-quality accounting standards that are focused solely on driving reliable financial reporting and are not used as a backdoor to achieve political or social agendas. Reliable financial reporting is critical,” he said according to the prepared remarks.

Global companies like Shell PLC and Rio Tinto PLC use international financial reporting standards to file annual reports with the Securities and Exchange Commission, but they don’t have to reconcile them to US accounting rules.

That financial reporting flexibility, which dates to 2007, was contingent on the IASB receiving reliable funding, Atkins said.

The IFRS Foundation said in an emailed statement Wednesday that it was halfway through a two-year program to develop a long-term funding strategy and increase efficiency.

It also said that the accounting and sustainability boards were funded separately and “their respective standards do not impose requirements on each other.”

The foundation launched a cost-cutting and fundraising drive after losing £2 million ($2.7 million) in 2024. The sustainability board relies heavily on seed funding from its three global headquarters in Germany, Canada and China, with some of the agreements ending next year.

Other than that the foundation relies on voluntary contributions from governments and companies including large accounting firms, raising fears that funders could influence standard setting.

In contrast, the US Financial Accounting Standards Board receives dedicated funding through fees on listed companies—support set out in federal law. But the Republican-led Congress has threatened the board’s budget over new income tax disclosure rules.

Atkins also called European sustainability disclosure laws burdensome for US businesses and urged EU policymakers to focus more narrowly on shareholders’ concerns.

The Wall Street watchdog last week announced a task force to target securities fraud by foreign private issuers listed on US exchanges. In June, the commission sought public input on whether to reconsider existing reporting requirements for those companies, which benefit from certain breaks on US disclosures.