Risk & Compliance

SEC Closer to Recognizing IFRS

Eliminating the need for foreign issuers to reconcile with U.S. GAAP will be the focus of next month's roundtable discussion.
Dave Cook and Stephen TaubFebruary 13, 2007

The Securities and Exchange Commission will take another step toward recognizing International Financial Reporting Standards at a roundtable on its IFRS “roadmap,” scheduled for March 6.

In the United States, foreign private issuers can already prepare regulatory filings using IFRS but must reconcile their results with U.S. generally accepted accounting principles. According to the SEC, following the roadmap would eventually eliminate the need for that costly reconciliation with GAAP.

The commission noted that the roadmap was first described in April 2005 by Donald Nicolaisen, then the SEC’s chief accountant, and affirmed last February by chairman Christopher Cox. Next month’s roundtable will be moderated by the current chief accountant, Conrad Hewitt, and John White, the director of corporation finance.

The roundtable will consist of three panels, which will address the roadmap’s relation to the U.S. capital markets with respect to capital-raising, to issuers, and to investors.

In a statement, Cox asserted: “Nearly 100 countries currently use, or have a policy of convergence with, IFRS, including the European Union, where IFRS reporting has been mandatory since 2005. Eliminating the current reconciliation requirement, and paving the way for the use of both systems in the United States, remains the objective of the roadmap. This roundtable will help us identify both opportunities and speed bumps along the way.”

Hewitt, in a statement, said he was pleased to be able to gather input from participants in the U.S. capital markets on “the potential effects of a co-existence of the IFRS and U.S. GAAP models.”

Corp Fin’s review of IFRS filings “is a key element to making progress on the roadmap,” commented White, in a statement. “I am looking forward to the roundtable as a corollary to the information we gather from that ongoing review process.”