SEC May Allow U.S. and Foreign Companies to Choose U.S. GAAP or IFRS

April 24, 2007

FEI Summary

On April 24, 2007, the U.S. Securities and Exchange Commission (SEC) announced the "next steps" it will take along its “International Financial Reporting Standards (IFRS) Roadmap.” Included among these next steps will be a Concept Release contemplating whether to allow U.S. based companies - in addition to foreign issuers - a choice between filing in IFRS or U.S. generally accepted accounting principles (GAAP), as well as a Proposed Rule that would formally propose permitting foreign filers that choice.

The SEC’s upcoming actions on the IFRS Roadmap include issuing two documents for public comment:

• Proposed Rule that would propose to give foreign private issuers a choice between filing in IFRS or U.S. GAAP for their filings with the SEC in the U.S. The SEC specified this proposed rule will be released “this summer,” with a comment deadline “this fall.”

• Concept Release to elicit comment on issues relating to the possibility of treating U.S.-based and foreign private issuers the same; i.e., whether to permit U.S.-based companies, as well as foreign filers, to have a choice between filing with the SEC in IFRS or U.S. GAAP. The SEC did not specify when the Concept Release will be issued - presumably it may be issued in tandem with the above proposed rule, considering the SEC commissioners would then be able to discuss and vote out releasing both documents at a single open commission meeting. The comment deadline was specified in that comments on both the proposed rule and concept release will be due “this fall.” 

Additional information including related comments of SEC Director of Division of Corporation Finance John White, and SEC Commissioner Roel Campos, can be found in this post  in FEI’s Financial Reporting Blog