The chairman of the US Securities and Exchange Commission ( SEC ) Paul S. Atkins, in his keynote speech at the inaugural OECD Roundtable on Global Financial Markets in Paris on September 10, set an optimistic and pro-innovation tone, signalling a shift from what he describes as overly aggressive enforcement under previous administrations to clearer, more predictable rules.

I will leave the analysis of the technical aspects of the speech to the financial experts, but there is one issue that Atkins briefly mentioned that should be of concern to Asian regulators, CFOs, investors and other stakeholders.

In his speech, Atkins says: “If the IASB [International Accounting Standards Board] does not receive full, stable funding, then one of the underlying premises for the SEC’s elimination of the reconciliation requirement for foreign companies in 2007 may no longer be valid, and we may need to engage in a retrospective review of that decision.”

This matters because most Asian and global companies report under International Financial Reporting Standards ( IFRS ) set by the IASB. At present, the SEC accepts IFRS reports without requiring “reconciliation” to US Generally Accepted Accounting Principles ( GAAP ), a policy that saves companies and investors significant costs.

To put Atkins comment in context, the IASB is financed by its parent organization, the IFRS Foundation, an independent, non-profit organization that oversees the development and governance of international financial and sustainability reporting standards. The IFRS Foundation secures funding from a variety of voluntary sources, mostly governments, accounting firms, corporates, or international bodies, to support the IASB's operations and standard-setting activities.

In 2021, the IFRS Foundation also set up the International Sustainability Standards Board ( ISSB ), another standard setting body for sustainability-related financial disclosures.

In simple terms, Atkins’ statement implies that the IFRS Foundation may, at some point, no longer have sufficient resources to finance two standard setting bodies, the IASB and the ISSB, at the same time.

It could also imply that the voluntary nature of its funding sources may potentially jeopardize the independence of the IASB and the IFRS standards, hence, they would by no longer be compatible with US GAAP standards.

Atkins also says that if the IASB’s independence or funding is questioned, the SEC could bring back the GAAP “reconciliation” requirement.

Asian concerns

For Asian and global companies that do business in the US, this would mean that if the SEC brings back the reconciliation requirement, they would have to prepare two sets of accounts, one for IFRS and one for US GAAP.

Analysts are of the general opinion that this would not be just an additional administrative burden, but it could also add millions of dollars annually in terms of costs and create confusion for investors.

For investors, this would mean that higher compliance costs will reduce resources available for dividends, reinvestment and innovation. Also, dual reporting may lead to valuation discounts if numbers look different under two systems. In addition, it would also discourage Asian companies, especially mid-caps, from US listings, limiting investor choice.

Many Asian economies, including China, Japan, South Korea, Hong Kong and Singapore, have adopted or converged with the IFRS for financial reporting, and there's growing momentum for the ISSB sustainability standards amid regional ESG priorities, such as climate disclosure rules evolving in Asia.

Hence, funding shortfalls could hinder the IFRS Foundation’s capacity to tailor standards to emerging market needs, such as those in Asia's diverse markets, and could potentially affect investor confidence and cross-border capital flows.

Asia-Oceania contributed £10.2 million ( US$13.8 million ) – 25% of total contributions – in 2024, down slightly from £10.5 million in 2023, according to the IFRS financial report’s data, making it the third-largest regional donor after Europe, 46%, and the Americas, 29%. Major Asian contributors include China ( £4.3 million, led by the Ministry of Finance and stock exchanges ) and Japan ( £3.4 million, from the Financial Services Agency and Financial Accounting Standards Foundation ).

While the IFRS admits that funding has trended downward modestly, it says that the foundation’s role in global transparency continues to expand, with no major disruptions reported as of mid-2025.

Asian regulators should monitor this issue closely due to their financial and operational dependencies, but analysts say the IFRS’ proactive reforms suggest the funding issue is manageable in the near term. But if contributions continue to decline or seed funding transitions falter, concerns could escalate, potentially prompting calls for mandatory levies or broader reforms.