Effective corporate governance requires reliable and consistent financial statements. Investors depend upon auditors to verify what management has done each year in innumerable corporate transactions. For decades, the American generally-accepted accounting principles (GAAP) have admirably and ably provided reliable reporting on a vast array of modern business situations.

Yet a serious drive to eliminate American GAAP, and replace them with the International Financial Reporting Standards (IFRS), is underway. A coalition has led a well-financed campaign to “dumb down” the financial reporting system that we all have grown to know, love, and trust.

Corporate management, of course, are behind this drive, hoping for their own convenience to be less accountable. This is understandable. But major American accounting firms have, surprisingly, joined with management. And the Securities and Exchange Commission, under Chairman Christopher Cox, has put more widespread use of the IFRS onto its active agenda.

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