More about the SEC 'roadmap' toward IFRSs

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28 Aug 2008

In a speech at the open meeting of the SEC at which the SEC agreed to propose a roadmap toward use of IFRSs by domestic SEC registrants, SEC Commissioner Elisse B Walter elaborated on several aspects of the yet-to-be-released proposal.

One is that an entity that chooses voluntary early adoption will be required to include, in its financial statements, a reconciliation from IFRS figures to US GAAP. That is because of the possibility that the Commission may ultimately decide not to require or allow US issuers to use IFRSs, or may delay the starting date. Click for Commissioner Walter's Remarks (PDF 78k). Here is an excerpt:

Most important, we have to keep in mind that no one knows for certain what the future will hold. I strongly believe that we have to prepare for the alternative that the Commission will determine not to adopt, or permit the use of, IFRS for US issuers. As the milestones presented in the Roadmap show, there are significant hurdles to overcome over the next three years in order for the Commission to determine to accept IFRS reporting from US issuers. Therefore, I strongly support the reconciliation proposal, otherwise known as Alternative Proposal B for early adoption. Under Alternative Proposal B, reconciliation would continue until further Commission action on the use of IFRS by US issuers. I believe that this reconciliation Proposal is extremely important – in order to increase comparability and help US investors transition to seeing US companies present their financials in IFRS. It is also critical to me because it gives early adopters of IFRS a way back to US GAAP if the Commission determines not to adopt the use of IFRS in 2011.

 

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