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• The Security and Exchange Commission (SEC) advocates reducing disparity between the accounting and disclosure practices of the United States and other countries as a means to facilitate cross-border capital formation while providing adequate disclosure for the protection of investors and the promotion of fair, orderly and efficient markets. The Commission also has encouraged standard setters and other market participants to reduce disparity.
• In 1997, the Commission noted that for issuers wishing to raise capital in more than one country, preparing more than one set of financial statements to comply with differing jurisdictional accounting requirements increased compliance costs and created inefficiencies. The Commission encouraged the efforts of the International Accounting Standards Committee (IASC), the predecessor of the International Accounting Standards Board (IASB), to develop a core set of accounting standards that could serve as a framework for financial reporting in cross-border offerings. These standards are now known as International Financial Reporting Standards (IFRS).
• On August 7, 2007, the SEC issued a Concept Release seeking comments on whether U.S. public companies should have the option of following IFRS. The AICPA Board issued a comment letter in support of the option.

Current Status

• In November 2007, the SEC unanimously voted to eliminate the requirement that foreign registrants listing in the U.S. reconcile their IFRS financial statements to U.S. GAAP, as long as they use IFRS as issued by the IASB. The rule amendment became effective on March 4, 2008, 60 days after publication in the Federal Register (http://www.sec.gov/rules/final/2008/33-8879fr.pdf). It applies to financial statements for years ended after November 15, 2007. The AICPA supported this change in congressional testimony in October 2007.
• The AICPA board received another update in December on emerging developments, including AICPA staff participation in an SEC roundtable. Ongoing dialogue between the organizations continues.
• The AICPA expects that the SEC will issue a rule proposal in the spring of 2008 setting forth the SEC’s position on when U.S. public companies will be required to follow IFRS and also whether they will allow an option to follow IFRS before the required date.

AICPA Staff Contact

• Dan Noll, Director, Accounting Standards, dnoll@aicpa.org, 212/596-6168
• Fred Gill, Senior Technical Manager, Accounting Standards, fgill@aicpa.org, 212/596-6012