SEC ADOPTS AMENDMENTS TO FORM 20-F RELATED TO THE FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
FOR IMMEDIATE RELEASE
Washington, D.C., April 13, 2005 - The Commission has adopted amendments that will affect foreign private issuers that change their basis of accounting to international accounting standards, known as International Financial Reporting Standards (IFRS). These amendments provide an accommodation to issuers that change their basis of accounting to IFRS prior to or for the 2007 financial year. The amendments also require certain disclosures from all foreign private issuers that adopt IFRS for the first time during any financial year. The Commission is not changing current requirements regarding the reconciliation of financial statement items to generally accepted accounting principles as used in the United States (U.S. GAAP).
Issuers that are registered with the SEC generally are required to provide in their SEC filings three years of audited financial statements prepared on a consistent basis of accounting. The amendments will permit eligible issuers to file two years rather than three years of statements of income, changes in shareholders' equity and cash flows prepared in accordance with IFRS in annual reports and registration statements filed during the first year in which they adopt IFRS, with appropriate related disclosure. To be eligible to rely on this accommodation, a foreign private issuer must adopt IFRS for the first time prior to or for its first financial year starting on or after January 1, 2007.
The amendments also require certain disclosures from issuers that adopt IFRS for the first time in any financial year. These requirements relate to an issuer's reliance on any of the transitional measurement exceptions available to a first-time adopter under IFRS and to the reconciliation to IFRS from the issuer's previous basis of accounting.
The Commission is adopting these amendments to promote and encourage the use of IFRS as a high quality set of accounting standards. Because the Commission also recognizes the significant efforts associated with the adoption of IFRS, the accommodation is also intended to ease the burdens that foreign companies may face when they adopt IFRS for the first time, while improving the quality of financial disclosure that they provide to investors. Issuers that apply accounting standards as adopted by the European Union in a manner that does not fully comply with IFRS are eligible to use the accommodation if they provide U.S. GAAP and IFRS reconciling information, if necessary.
In connection with the adoption, Donald T. Nicolaisen, Chief Accountant of the Commission, stated, "These amendments will facilitate the transition by foreign registrants to IFRS and will promote investor protection by requiring comparable, high quality information. We believe investors and issuers are well served by the greater comparability that will result from broader use of IFRS, and look forward to many companies switching to IFRS in their SEC filings."