SEC Publishes Financial Reporting Proposal For Comment

by Philip Morton, Investors Offshore.com

06 July 2007

The US Securities and Exchange Commission on Tuesday 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 US Generally Accepted Accounting Principles (GAAP).

The Commission voted unanimously on June 20, 2007, to issue the proposal for public comment.

SEC staff also published a report containing 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.

Under the SEC's current rules, foreign private issuers are required to reconcile to US GAAP the financial statements that they file with the Commission if their financial statements are prepared using any basis of accounting other than US 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 US GAAP.

"The Commission has taken a significant step on this important policy matter that was outlined in the 'Roadmap' announced in 2005," announced Conrad Hewitt, SEC Chief Accountant.

He added:

"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."

The comment period extends for 75 days after the proposal is published in the Federal Register.

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