Just in time for the Fourth of July holiday, the Securities and Exchange Commission released beach reading for CFOs: a 121-page document proposing that foreign companies will no longer have to reconcile their financials with U.S. generally accepted accounting principles.

The proposal isn’t just for the eyes of executives who work at companies headquartered outside of the United States. It could in fact lead to another proposal U.S.-based CFOs could take a special interest in: the right for American companies to file their financials using solely International Financial Reporting Standards.

If the current SEC proposal is approved, foreign companies registered with the SEC that use IFRS, which is published by the International Accounting Standards Board, wouldn’t have to provide a separate reconciliation report starting in 2009. On Tuesday, the regulator announced its proposal will be exposed to public comment for the next 75 days. Besides asking several questions, the document gives the history of IFRS and the SEC’s reconciliation requirement and explains how the IASB and the Financial Accounting Standards Board are in the process of converging their standards.

Last month, the commissioners voted unanimously to propose the changes and announced that the staff is preparing a concept release questioning whether U.S. companies should also be allowed the same consideration. SEC Chairman Christopher Cox has said the release will be presented later this summer.

Cox praised the proposal during the open meeting for marking a “significant next step in the road toward a single set of globally accepted accounting standards.” His praise was echoed later that week by the IASB. “If approved, the rule will eventually reduce significantly the barriers to capital flows between countries using full IFRSs and the United States,” said the standard-setter’s chairman, David Tweedie.

In its proposal, the SEC has asked for feedback in several areas, ranging from the technical implications to the broader issues the changes could raise. Those questions include:

• Are there issues on which further guidance for IFRS users that do not reconcile to U.S. GAAP would be necessary and appropriate? Should issuers and auditors consider guidance related to materiality and quantification of financial misstatements?

• Without the reconciliation to U.S. GAAP, should the SEC be concerned about member firm requirements to have persons knowledgeable in accounting, auditing and independence standards generally accepted in the United States review IFRS financial statements filed with the commission?

In addition to releasing its proposal this week, the SEC has created a section on its website showing what its staff thinks about IFRS.

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