SEC OKs plan that could lead to global accounting rules

— -- Securities regulators on Wednesday gave the go-ahead to a plan that could require thousands of U.S. companies to change from U.S. accounting standards to global accounting rules that are quickly gaining favor abroad.

The Securities and Exchange Commission unanimously approved a "road map" that might require large companies to adopt international standards by 2014, midsize corporations by 2015 and small businesses by 2016. Some large firms might voluntarily adopt the international rules even sooner.

SEC Chairman Christopher Cox noted at the commission's meeting that "the language of business and finance" is rapidly converging. More than 100 countries and the European Union have adopted or plan to embrace international standards, he said.

"One of the more revolutionary developments in the world's capital markets is the remarkable quickening pace of acceptance of a true lingua franca for accounting," Cox said.

International accounting standards are young and still evolving. Given U.S. regulatory and economic clout, the pace of adoption by more countries is likely to quicken. Many in the business and financial world, including Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, support global accounting standards.

Last fall, the SEC commissioners moved to allow foreign firms to file their financial statements to the SEC using international standards rather than U.S. accounting rules.

Skeptics believe that international standards are inevitable as the global economy grows, but fear that putting them into practice could be a legal and regulatory nightmare.

"It makes sense to have one set of standards, but will it be applied and enforced in the same way in country X and here?" says Jack Ciesielski, publisher of The Analyst's Accounting Observer and owner of R.G. Associates, an investment research firm in Baltimore. "This is a moon shot, a lofty ambition. There are a lot of things that have to be resolved."

Cox said that international standards must be above board and high quality, making the interests of investors a top priority. Global regulators also must be free from the influence of politics, industry players and national or regional biases, he said.