Thursday, October 28, 2010

IFRS Adoption by the US: Definitely Not in the "Public Interest"

Via The Accounting Onion.
The SEC is similarly charged with acting "in the public interest". This phrase gets a fairly precise meaning from the Securities Acts, where it is introduced. The 1934 Securities Exchange Act in Section 2 explains the necessity of that legislation in terms of the "national public interest", and it refers to the need to protect persons and institutions of the United States, including interstate commerce, the national credit, the Federal taxing power, the national banking system and Federal Reserve System, and U.S. markets. So clearly in the context the "public interest" means "in the national public interest," that is, for the common good of the United States. This makes sense, because the SEC is a government entity of the United States.
No doubt, the common good of a nation will typically coincide with what is good for nations in general. So in general a nation will best promote its national interest by promoting the good of nations in general. But in those unusual cases where there is a conflict, a governmental entity such as the SEC would apparently be bound to favor the "public interest", that is, "national interest", of the nation it serves.
But consider in contrast IASB. The IASC Foundation Constitution states that, "The members of the IASB shall be required to commit themselves formally to acting in the public interest in all matters." Obviously they do not act "in the public interest" in the same sense as the SEC, since they are not obliged in cases of conflict to prefer the common good of the United States over the good of nations generally.
Click Here to Read: IFRS Adoption by the US: Definitely Not in the "Public Interest"

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