The text poses the question – Who reads financial statements? So let's discuss that.

List three different categories of people that are interested in financial statements. As a Financial Manager in a Firm, why would these people and their interest matter to you?

For each category provide an example of the type of information they would be interested in and discuss why.

Review the document “SEC Chief Says Don’t Give Up on Global Accounting Push“. How would a global standard for accounting affect companies and interested parties? Is it a good thing? Are there drawbacks?

SEC Chief Says Don’t Give Up on Global Accounting Push

But Mary Jo White statement suggests any action will be left for new chairman




Jan. 5, 2017 6:42 p.m. ET

If the U.S. is going to move toward greater use of global accounting rules—something that’s been under consideration for years—it’ll have to wait still longer.

The Securities and Exchange Commission should continue to work toward advancing high-quality, globally accepted accounting rules, and should regard the issue as “one of its highest priorities,” SEC Chairman Mary Jo White said Thursday. But her statement made no mention of any plan to take action on the issue before she leaves the commission later this month—indicating it will likely be left for Jay Clayton, the incoming chairman-designate, to address.

U.S. companies use generally accepted accounting principles, or GAAP, as the basis for calculating their financial statements, but most of the rest of the world uses a different set of rules, known as International Financial Reporting Standards, or IFRS, which differs from GAAP in some respects. Accounting-industry leaders and international rule makers have long urged the U.S. to switch over to IFRS, saying it would benefit investors to have a single world-wide set of accounting rules.

But the U.S. has resisted such a move because of concerns over the costs and implementation of a switch. The SEC has long mulled whether to use IFRS more, but its efforts have stalled multiple times, and SEC officials have said in the past there is little or no support among U.S. companies for a total changeover from GAAP to IFRS.

In her statement, Ms. White said “it is now clear that U.S. GAAP and IFRS will continue to coexist in our public capital markets for the foreseeable future,” and she acknowledged the SEC hasn’t taken any action since 2010 on whether to move toward greater use of the global rules. But she urged the SEC under its new chairman “to speak again on this issue and agree on a path forward to most effectively advance this critical objective.”

The Financial Accounting Standards Board and the International Accounting Standards Board—the U.S. and global accounting rule makers, respectively, which have worked to reduce differences between the two sets of rules—should continue to collaborate, Ms. White said.

One idea that has been on the table at the SEC, but which Ms. White didn’t mention, is a proposed middle-ground move that would allow U.S. companies to use IFRS to provide supplemental information to investors, even as their main financial statements would continue to be calculated using GAAP.

That proposal was first floated in 2014 by James Schnurr, then the SEC’s chief accountant, and as recently as last month Wesley Bricker, the current chief accountant, said it was “worth continuing to consider” the idea. Ms. White herself said in 2015 that using IFRS on a supplemental basis had “the potential to be a useful next step” in considering how the U.S. should approach the global rules.

Write to Michael Rapoport at