SEC scraps IFRS-GAAP reconciliation rule

USA’s Securities and Exchange Commission (SEC) yesterday voted unanimously to approve rule amendments which will permit US-listed foreign companies to issue financial statements in the US without reconciliation to US Generally Accepted Accounting Principles (GAAP) if they use the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

A SEC statement said the purpose of the requirement to use the IASB-approved version was to ‘encourage the development of IFRS as a uniform global standard’ rather than a divergent set of standards applied differently in every country. The rule amendments will take effect 60 days after they are published in the Federal Register and apply to financial statements, covering years ended after November 15.

‘Consistent application of international accounting standards will help the two-thirds of US investors who own foreign securities to understand and draw better comparisons among investment options than they could with a multiplicity of national accounting standards,’ Christopher Cox, SEC chairman, said.

Cox also announced SEC would convene two roundtables, on December 13 and December 17, to collect more feedback from the public on the issue of giving US domestic issuers the same option foreign issuers have, to use either IFRS or GAAP in the US.

Further reading:

US companies await SEC rules verdict

Herz calls for calm approach in IFRS convergence rush