Staff Writer

The Securities and Exchange Commission has proposed transitioning from U.S. accounting standards for publicly traded companies to an international standard that would make uniform financial reports across borders.

During a hearing last week, SEC Chairman Christopher Cox said the uniform standards "would significantly improve investor confidence" in those standards and "would be a boon to emerging markets."

Cox made reference to the fact that the 10 most commonly spoken languages all have at least 100 million speakers, making communication difficult.

"Fortunately, we won't have to wait as long for the language of finance to converge," he said, stating that "an international language of disclosure" would facilitate the flow of capital to the markets of most interest to investors.

He also said "all of Europe and more than 100 companies around the world require the use of the International Financial Reporting Standards [IFRS]," but the relatively limited history of that effort is an important reason the U.S. needs to continue to support the work of the authoring body, the International Accounting Standards Board in London.

According to Cox, the roadmap would require "that the standards be crafted in the interest of investors" and that "the standards-setting process be transparent." The standard-setter "must also be independent from special pleaders" and from regional biases, he said, noting also that "it is vitally important that the stakeholders participate in the process."

Work on the IFRS, formerly known as International Accounting Standards, commenced in 1973 and was largely completed in 2001.

The SEC proposes transitioning financial reporting to a set of international accounting standards by 2014, but Cox said the roadmap would allow the largest publicly traded U.S. companies to make the switch by 2010.

The move is supported by a number of multinational corporations that have to replicate their reports by more than one standard, but some critics say the transition period could generate confusion as to the meaning of competing versions of a report.

Cox's tenure at the SEC will likely end when the next president is sworn in, but many are of the opinion that the push toward international standards is likely to persist after January 2009.