By James Hamilton, J.D., LL.M.
A recent blog talked about the specter of inconsistent interpretations that is haunting international financial reporting standards. Now SEC Commissioner Paul Atkins indicates that the specter of multiple national versions of IFRS could imperil the goal of ending the requirement that IFRS-driven financial statements be reconciled to US GAAP. In remarks to the Institute of International Bankers, he said that multiple interpretations of IFRS could takes us back to a world of multifarious GAAPs, each with its own idiosyncrasies.
As the SEC staff beings reviewing IFRS-driven filings, it is troubling that in only 40 or so cases were foreign registrants' financial statements represented as being in accordance with IFRS as promulgated by the IASB. This number was significantly lower than expected. One reason for the low number is that many foreign registrants stated that their financial statements were prepared in accordance with IFRS as promulgated by their home countries, instead of IFRS as promulgated by the IASB.
These developments do seem to imperil the SEC’s roadmap to reconciliation. But Chairman Cox and Commission McCreevy are well aware of the threat to the roadmap posed by inconsistent IFRS interpretations, and CESR is also on the job. Thus, before the 2009 reconciliation deadline, there is still time to prevent derailment.