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US SEC official discusses IFRSs

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04 Aug 2009

Speaking at the annual meeting of the American Accounting Association in New York on 3 August 2009, Wayne Carnall, Chief Accountant of the Division of Corporation Finance of the US Securities and Exchange Commission, discussed issues relating to the use of IFRSs by SEC registrants.

Among the points Mr Carnall made:
  • In November 2007, the SEC voted to allow foreign registrants to use IFRSs without a reconciliation to US GAAP. Since then, only 137 of the more than 1,000 foreign registrants have chosen to use IFRSs.
  • The number of foreign registrants in the United States has been declining over the past few years, including a two-thirds drop in European registrants. Mr Carnall attributed the decline primarily to cost-benefit reasons.
  • In November 2008, the SEC invited comment on a proposed Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by US Issuers, Mr Carnall pointed out that the draft Roadmap was 'far from being a proposal' and, at this point, there is 'no date certain' regarding use of IFRSs by US domestic registrants. Mr Carnall expressed disappointment that the SEC received fewer than 250 comments on a proposal that could significantly affect all 12,000 SEC registrants.
  • In November 2008, concurrent with the proposed Roadmap, the SEC also proposed to permit voluntary early adoption for a limited group of large US registrants (based on industry and size) for periods ending after 15 December 2009 (filings in 2010). Mr Carnall said the responses 'did not indicate much support for the option'.
  • Mr Carnall noted that there continue to be 'significant and fundamental differences between IFRSs and US GAAP' both in terms of the written standards and how the standards are implemented.
  • He expressed concern that IFRSs might become regionalised or localised by differing local interpretations or modifications. The goal, he said, should be one common standard around the world.
  • Mr Carnall noted that there is no SEC prohibition for a US registrant to publish IFRS financial statements in addition to US GAAP statements – yet no company is doing that. If the market demanded it, or if companies saw that IFRS financial statements might improve their access to capital, they would likely be publishing IFRS financial statements voluntarily. He noted a reluctance of companies to invest resources into IFRSs (systems, training, etc) until the SEC gives a date certain.

 

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