The SEC has recently proposed a Roadmap for the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). As capital markets have become increasingly global, U.S. investors have a corresponding increase in international investment opportunities. In this environment, the SEC believes that U.S. investors would benefit from an enhanced ability to compare financial information of U.S. companies with that of non-U.S. companies.
The SEC believes that a single set of high-quality global accounting standards is an important means of enhancing comparability. In this regard, the SEC believes that IFRS has the potential to best provide the common platform on which companies can report and investors can compare finance information.
The SEC’s proposed Roadmap addresses the basis for considering the mandatory use of IFRS by U.S. issuers. It then describes seven milestones, which, if achieved, could lead to the use of IFRS by U.S. issuers in their filings with the SEC. The SEC would determine in 2011 whether to proceed with rulemaking to require that U.S. issuers use IFRS beginning in 2014, if the SEC concludes that use of IFRS is in the public interest and protects investors.
The seven milestones relate to:
- Improvements in accounting standards
- The accountability and funding of the IASC Foundation
- The improvement in the ability to use interactive data for IFRS reporting
- Education and training relating to IFRS
- Limited early use of IFRS to enhance comparability for U.S. investors
- The anticipated timing of future rulemaking by the SEC
- The implementation of the mandatory use of IFRS by U.S. issuers.
The complete text of the Roadmap release may be accessed at: Proposed Rule Release Nos. 33-8982; 34-58960; File No. S7-27-08
By Steve Kronengold and David C. Zuckerbrot. © November 2008. All rights reserved.
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