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Deloitte comments on SEC IFRS 'Roadmap'

  • Deloitte Comment Letter Image

07 Apr 2009

Deloitte & Touche LLP (United States) has submitted to the US Securities and Exchange Commission its views on the SEC's proposed Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers.

The letter expresses support for allowing foreign registrants to use IFRSs and for the convergence efforts of the IASB and the FASB. But the letter suggests that there are some areas of the Roadmap that require further consideration by the SEC before it is adopted. Click for:

An excerpt from the Deloitte letter:

We support the steps that the SEC has already taken toward the acceptance of IFRSs in the U.S. capital markets, including allowing foreign private issuers to use IFRSs in their SEC filings without a reconciliation to U.S. GAAP. In our view, IFRSs are of high quality and are sufficiently comprehensive to provide transparent financial information. We also support a standard-setting process that addresses the ongoing needs of financial statement users and makes relevant improvements to standards. To that end, we are supportive of the convergence efforts of the IASB and FASB in developing the highest quality standards.

As with any important policy decision, the Commission will need to consider and weigh various factors in deciding whether to mandate IFRSs for all U.S. issuers. More specifically, the Commission will need to consider recent developments relating to the financial crisis, including the loss in confidence in the U.S. capital markets, the development of capital market alternatives outside the United States, and the impact on global competitiveness. Also, there have been ongoing questions about U.S. financial reporting, including the complexity of U.S. GAAP and the need to have standards that are less reliant on detailed rules and bright lines. While some may argue that, in light of recent events, this is not the time to make fundamental changes in financial reporting requirements, we believe that these very events reinforce the need to rethink the approach to financial reporting.

We support the objective in the proposed roadmap of transitioning all U.S. issuers to IFRSs but have a number of observations and recommendations regarding how the proposed roadmap can be improved. The most important of these recommendations are (1) the current need for the SEC to be more definitive about its plan to transition all U.S. issuers to IFRSs in the future and (2) the removal of the significant disincentives for early adopters of IFRSs.

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