SEC Soliciting Public Comment on Eliminating Reconciliation Requirement for IFRS Financial Statements
Commission Staff Publishes Observations Report, Launches Web Site of Correspondence from Reviews of Filings Containing IFRS Financial Statements
FOR IMMEDIATE RELEASE
Washington, D.C., July 3, 2007 - The Securities and Exchange Commission has published for public comment a proposal to eliminate the current requirement that foreign private issuers filing their financial statements using International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board (IASB) also file a reconciliation of those financial statements to U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Commission voted unanimously on June 20, 2007, to issue the proposal for public comment.
SEC staff also published a report noting some general observations about the application of IFRS based on staff reviews of annual reports from more than 100 foreign private issuers containing financial statements prepared for the first time using IFRS. The agency has launched a new Web page that consolidates SEC staff correspondence on those completed filing reviews as well as company responses to the comment letters.
Under the SEC's current rules, foreign private issuers are required to reconcile to U.S. GAAP the financial statements that they file with the Commission if their financial statements are prepared using any basis of accounting other than U.S. GAAP.
The proposed amendments would:
- apply to foreign private issuers that file financial statements that comply with the English language version of IFRS as published by the IASB, and
- allow those issuers to file those financial statements in their annual filings and registration statements without reconciliation to U.S. GAAP.
"The Commission has taken a significant step on this important policy matter that was outlined in the 'Roadmap' announced in 2005," said Conrad Hewitt, SEC Chief Accountant. "The staff continues to evaluate the considerations supporting the acceptance of IFRS financial statements and looks forward to receiving public input during the comment period."
John W. White, Director of the Commission's Division of Corporation Finance, said, "Along with the Commission's work relating to internal control reporting and deregistration, this proposal to accept financial statements prepared in accordance with IFRS as published by the IASB without a U.S. GAAP reconciliation represents another significant action to tailor the regulatory environment for foreign companies in the U.S. public capital markets. We look forward to public feedback on this initiative."
Mr. White also noted, "With a significant number of first-time IFRS filings already reviewed by the Division of Corporation Finance, we are launching this SEC Web page linking to the actual text of our comment letters to help provide easier access to investors."
The comment period extends for 75 days after the proposal is published in the Federal Register.
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Video of SEC Chairman Christopher Cox's statement on the rule amendments at the SEC's Open Meeting on June 20, 2007:
Windows Media Player (19 MB)
QuickTime (20 MB)
Staff Observations Report:
Staff Review Correspondence: