As directors are increasingly aware, over the past several weeks, the U.S. Securities and Exchange Commission (SEC) has taken initial steps that could begin the process of moving U.S. companies away from reporting financial information in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) and toward the use of IFRS. On August 27, 2008, the SEC announced it will publish a proposed Roadmap to IFRS. It announced that it “would make a decision in 2011 on whether adoption of IFRS is in the public interest and would benefit investors. The proposed multi-year plan sets out several milestones that, if achieved, could lead to the use of IFRS by U.S. issuers in their filings with the Commission.”
In explaining the SEC‟s support for a transition to IFRS, SEC chairman Christopher Cox noted that over the past several years, “we have seen the emergence of IFRS as a high quality, increasingly globally accepted set of financial standards. Over 100 countries and all of Europe currently require or permit IFRS reporting, with approximately 85 of those countries requiring IFRS reporting for all domestic, listed companies. The market capitalization of exchanges within those 85 countries requiring IFRS represented approximately 35 percent of global market capitalization as of the end of July [2008]. That number exceeds the 28 percent share of global market capitalization held by United States exchanges. And the share of global market capitalization represented by IFRS markets will grow still larger with the inclusion of the additional countries that have decided to adopt IFRS by 2011.”
Read the full paper, published by Tapestry Networks and Ernst & Young.