Feds Plan to Allow Foreign Accounting Rules

Critics slam 'outsourcing' of financial protections
By Rob Quinn,  Newser Staff
Posted Jul 5, 2008 7:17 AM CDT
A visitor studies stock prices at the Australian Securities Exchange in Sydney, Australia. SEC proposals will allow foreign brokers, starting with the Australians, to sell direct to he US.   (AP Photo/John Pryke)
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(Newser) – Federal officials are proposing to loosen accounting regulations, allowing American companies to shift to international standards that offer more latitude in reporting earnings, the New York Times reports. The move would make businesses more competitive, the administration argues, but it would also effectively exempt them from the investor-protection measures instigated after the collapse of Enron, critics note.

Foreign standards allow companies to report higher earnings—on average, from 6-8%, accounting experts tell the Times—and require less transparency. The shift would also do an end run around conflict-of-interest rules for auditors. "We would not for a moment tolerate having American auto safety standards set by China or India,” one securities expert says. “Why should we do it for financial safety standards?