FEI Responds to SEC IFRS Proposal

FEI Responds to SEC IFRS Proposal

September 26, 2007

FEI Summary

FEI’s Committee on Corporate Reporting (CCR) filed a comment letter with the Securities and Exchange Commission (SEC) on Sept. 25, 2007, noting, “CCR fully supports the concepts underlying the SEC’s “roadmap” to elimination of the requirement to reconcile IFRS (as adopted by the International Accounting Standards Board (“IASB”)) filings to U.S. GAAP.”

The letter, signed by CCR Chair Arnold C. Hanish, stated: “We believe that IFRS standards are of sufficiently high quality and are capable of consistent application such that acceptance of financial statements prepared in accordance with them in U.S. capital markets would meet investor needs.”

“We also observe,” said CCR, “and the SEC’s roundtable on March 6th of this year affirmed, that the reconciliation to U.S. GAAP is not analyzed or otherwise incorporated into analysts’ forecasts or financial statement analyses prepared by sophisticated users of financial statements.”

“Furthermore the prospect that the SEC may not drop the reconciliation has lead European regulators to actively consider whether to impose a similar reconciliation requirement on U.S. issuers that trade in European capital markets. That potential action is inextricably linked to the SEC’s efforts in this area,” said CCR.

“For all of these reasons,” said CCR, “we believe that the elimination of the reconciliation from IFRS to U.S. GAAP is an important and necessary step in the direction of the ultimate goal: achieving a single set of global accounting standards.

Additional points made in CCR’s letter include:

• using the potential elimination of the reconciliation as the reward for achieving an undefined threshold of convergence is inappropriate and unjustified.
• investors understand the key differences between the two sets of standards and that informed and rational capital allocation decisions are being made in light of those differences.
• there were no disruptions or dislocations in European capital markets when listed companies began filing IFRS financial statements in 2005.
• to create a high-quality reconciliation between IFRS and U.S. GAAP requires an entity to essentially keep two sets of books, which is both costly and inefficient.

CCR added, “We hope that … the SEC will continue to pursue the equally important issue of allowing U.S. companies to apply IFRS as well (as contemplated in your recently issued Concept Release which we plan to comment on separately).”

Learn More From SEC, IASB, IAASB, FASB, and Other Leaders at

FEI’s Global Financial Reporting Conference September 28 in New York City

Learn more about the impact of IFRS on U.S. companies at FEI’s Global Financial Reporting Conference, being held at the Marriott Marquis in New York City September 28. Leading regulators from the SEC, IASB, FASB, IAASB, and leading financial executives and auditors will be there to discuss the changing global financial reporting landscape and how it can impact you. See the agenda, register now!

“Accounting Without Borders: Has Its Time Come?”

 – in Sept. 2007 issue, Financial Executive Magazine

See also the article, “Accounting Without Borders: Has Its Time Come?” by Ellen M. Heffes, Executive Editor, Financial Executive Magazine, and Cheryl de Mesa Graziano, Vice President, Financial Executives Research Foundation (FERF), which includes insights on the growing impact of adoption of IFRS from Rudolph Bless, Chief Accounting Officer, Credit Suisse Group, Greg Nelson, Vice President, Accounting Policy and Financial Reporting, IBM, Jim Campbell, Vice President and Corporate Controller, Intel Corporation, Aaron Anderson, Senior Manager, Accounting Practices, IBM, and Maxwell Downing, Intel’s IFRS Policy Controller.

Prepared Sept. 26, 2007 by Edith Orenstein, Director, Technical Policy Analysis, Financial Executives International. This summary does not reflect FEI opinion unless specifically stated above.