SOX Center

The U.S. and Europe should be able to achieve a single accounting standard by 2009, the chairman of the Securities and Exchange Committee, Christopher Cox, said Sunday.

Cox was appearing on a panel at the German Marshall Fund Brussels Forum. In other comments, he said the SEC was proving able to modify the U.S.’s Sarbanes-Oxley legislation to meet European concerns and that he expected the accounting progress to become a key part of a new transatlantic partnership on eliminating regulatory divergences.

U.S. President George W. Bush and German Chancellor Angela Merkel are due to sign a new regulatory partnership Monday in Washington. The deal will create a transatlantic council to set priorities. Accounting standards are a “wonderful example,” a “tangible result” of what the new accord can achieve, Cox said. Progress towards common accounting standards is “going swimmingly,” he added. Specifically, he said the SEC was already willing to allow foreign issuers of securities to report results either in the IFRS international standards or the U.S. GAAP standards. It soon will consider whether allowing U.S. issuers to have a similar choice, he added.

European and U.S. regulators are working together well, Cox continued. He noted how they had managed to avoid a “calamity” when the New York Stock Exchange took over Euronext. He also noted how the SEC had managed to be “attentive to European concerns” about Section 404 of the U.S. Sarbanes-Oxley Act of 2002, which required strict internal audits of corporate accounts.

MarketWatch: SEC’s Cox sees common accounting standards by 2009

America’s Most Trustworthy Companies

Alexander the Great is reputed to have said, “Upon the conduct of each depends the fate of all.”

More than two millennia on, the words of the Macedonian king echo true in the boardrooms of America, where the tainted winds of option backdating, insider trading and questionable pension accounting blow fitfully–along with the occasional gust still from the Enron-era corporate scandals.

Trust in free-market capitalism requires that shareholders and other stakeholders in the system have confidence in the probity of companies. Hence accounting standards and governance rules, and the regulators’ requirement that they be transparent.

Forbes: The Good Bookkeepers

Increasing market liberalization and the development of European Union and Asian capital markets are undermining New York’s position as the premier provider of global finance.

The relative weight and competitiveness of financial centers in the global economy is a major concern for national and local policymakers. In recent years, London, New York’s main competitor, has been attracting more business and generating more financial sector jobs.

A recent report claims competition between financial centers is increasingly a function of access to talent and regulatory and legal environments. There is increasing concern that the United States is losing on both counts due to increasing legal and regulatory constraints and restrictive immigration laws:

1. Sarbanes-Oxley. A majority of business leaders interviewed for the report believe the Sarbanes-Oxley Act of 2002 has helped improve corporate governance, transparency and accounting standards in the United States. However, many are also concerned that the costs of compliance may be discouraging foreign firms from listing in the United States in favor of markets such as the United Kingdom, where costs of compliance are lower.

Beyond the issue of increased costs is the implicit extra-territorial reach of U.S. authorities via Section 404 of Sarb-Ox.

Forbes.com: Financial Power Shifts Away From U.S.

Finance chiefs of the world’s seven richest nations agreed over the weekend to look at ways to cut back on overlapping regulations for companies doing business internationally while at the same time recognizing each nation’s unique rules and standards.

The agreement by the finance ministers and central bank governors of the G7 to try to harmonize their regulatory regimes and ease trade in securities across their borders appeared to be the latest attempt by policymakers to take a hard look at regulatory burdens on companies and markets.

In separate remarks to reporters, the Wall Street Journal reported, U.S. Treasury Secretary Henry Paulson said he and his international counterparts are exploring ways to reduce overlapping financial regulations and standards that burden companies operating in the global market.

Regulations including accounting standards mandated by the Sarbanes-Oxley Act of 2002 have come under heavy fire by businesses and some lawmakers who say the rules are driving up the cost of doing business and making the U.S. less competitive.

MarketWatch: G7 takes aim at overlapping regulatory burdens

The ICAEW, supported by the Confederation of British Industry, will today call on US regulators to ‘mutually recognise’ the rigour of British accounting standards, rather than try and impose the US system on British headquartered and regulated companies.

According to the Daily Telegraph, both organisations will be represented at a round table debate of senior accounting and auditing figures, regulators and corporate leaders from both the UK and US in London.

Richard Lambert, the CBI’s director general and Robert Hodgkinson, the institute’s technical director, will speak alongside their colleagues from the US against the rules-based approach coming from Washington in the wake of Sarbanes-Oxley and other corporate governance measures.

AccountancyAge:ICAEW to call for more US recognition