December 10, 2008


THE IFRS ROADMAP:
SEC PLANS INTEGRATION OF US AND
GLOBAL FINANCIAL REPORTING STANDARDS

The Securities and Exchange Commission (SEC) has taken the first step toward integrating US financial reporting into a more globally uniform standard.

The SEC has long supported the use of a single, widely accepted set of high-quality accounting standards to enable US investors to make better-informed investment decisions. It also recognizes a need to better enable US public companies to access the global capital markets.

To achieve these goals, the SEC recently proposed a roadmap for shifting public company financial reporting from US Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) over the next six years. The SEC’s proposal, if implemented, will have widespread ramifications well beyond financial reporting by US public companies. Business enterprises planning to access capital markets or to combine with public companies, private business enterprises in regulated industries populated by public companies and commercial borrowers living with financial covenants would need to follow IFRS-based financial reporting. Fund managers, financial institutions, investment bankers and professional financial service providers ranging from actuaries to credit rating agencies and valuation consultants would need to be formally educated and to adapt to different accounting standards.

For our readers, we have prepared a brief overview of the practicalities surrounding the transition to IFRS. Please read it here.