Return of the Regulators

As all eyes monitored the new president's economic stimulus plan, a group of individuals -- some new, some old, many familiar -- operated behind the scenes, preparing to wield their influence on regulatory matters that will affect corporate finance executives long after the credit-and-confidence crisis abates.

These regulatory matters and the individuals currently shaping them bear close monitoring by finance leaders and other GRC executives in the months ahead.

Some of these sources of GRC influence may surprise. For example, consider the future of the U.S. Securities and Exchange Commission (SEC), whose abolishment (floated in some news articles) remains a long shot. The SEC's fate more likely includes a merger with the Commodity Futures Trading Commission (CFTC); however, this marriage would hinge less on how well the commissions' leaders get along and more on whether members of the four Congressional committees that oversee both agencies see eye to eye.

The health of this relationship largely boils down to money. Membership on the committees that oversee the SEC and CFTC confers a valuable campaign fund-raising opportunity. A merger could eliminate this fund-raising opportunity for as many as half of the members on these committees.

What follows is a rundown of important regulatory issues to be addressed in the weeks and months ahead. The collection of questions and influences below is not exhaustive. Rather, it is intended to guide corporate finance executives' attention to the shifting, and often surprising, sources of influence in the wake of an historical presidential election and a turning point in the country's economic history.

Issue: International Financial Reporting Standards (IFRS) adoption
Key Question: How much IFRS-GAAP convergence will take place in the coming 2 years -- regardless of any changes to implementation timelines?
Major Influences: The FASB and IASB leadership

The current SEC exposure draft on the transition to IFRS implementation contains a staggered implementation date, between 2014 and 2016. However, newly appointed SEC chair Mary Schapiro expressed caution in both the oral and written testimonies she provided to Congress following her nomination. The new SEC chair said that she would take a "deep breath" before reviewing the proposed IFRS transition timeline. She also signaled that she will not feel "bound" by the timeline draft that currently exists.

While this stance opposes new Economic Recovery Advisory Board head Paul Volcker's support for a quicker transition to IFRS, the contrast may not matter. This is because the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have been working together to converge IFRS and GAAP for years.

The collaboration continues: The "gap" between IFRS and GAAP continues to shrink. If the SEC delays the official start of IFRS implementation to 2016, for example, this gives U.S. companies two more years of gradual adjustments, which should help to ease the amount of work required during the transition. Even in a highly unlikely situation where the move from GAAP to IFRS is scrapped or postponed indefinitely, the slow but steady convergence of the two sets of guidelines may result in a de facto transition anyway.