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SEC to explore permitting voluntary supplementary use of IFRSs

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Dec 08, 2014

At this year’s AICPA Conference on Current SEC and PCAOB Developments, SEC Chief Accountant James Schnurr spoke about a plan to consider whether U.S. companies should be permitted to voluntarily provide IFRS-prepared financial statements as a supplement to their U.S. GAAP financial statements. He noted that in the coming months, he hopes “to commence discussions with the Chair and the Commissioners about the different alternatives for potential further incorporation of IFRS and the related issues/concerns of each alternative with the objective of reaching a recommendation on what, if any, further incorporation or use of IFRS by US registrants would be permitted or required.”

Al­ter­na­tives already under consideration by the SEC regarding the use of IFRSs in the United States include (1) the outright adoption of IFRSs, (2) providing U.S. reg­is­trants with the option to file IFRS financial state­ments, and (3) the so-called "con­dorse­ment" approach."

Mr. Schnurr explained the rationale for the new alternative as follows:

[W]e understand that some domestic issuers may, now or in the near future, prepare IFRS-based financial information in addition to the U.S. GAAP based information that they use for purposes of SEC filings. However, regulatory constraints may dissuade some issuers from providing this information, as current SEC rules would consider IFRS-based information to be a “non-GAAP” financial measure for a domestic issuer. Should IFRS-based information continue to be considered “non-GAAP” financial measures subject to the requirements for such measures, or should it be thought of differently? Under this line of thinking, issuers that do not believe IFRS-based information would be beneficial to investors would not be forced to undertake what we understand to be, in some cases, significant implementation costs. 

The full text of Mr. Schnurr’s speech is available on the SEC’s Web site.

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