SEC's IFRS Roundtable Hits the Right Notes

The SEC roundtable on international financial reporting standards (IFRS) was one of the most important roundtables in recent years. It featured panel discussions on the SEC's roadmap to eliminate the current requirement to reconcile IFRS-driven financial statements to U.S. GAAP by 2009. This effort is being watched closely by the global markets and by the over 100 countries that have adopted IFRS.

SEC Chairman Christopher Cox applauded the efforts of FASB and the IASB to converge accounting standards. Some believe that convergence is impossible, Cox noted. The SEC does not expect total convergence before it will eliminate the reconciliation requirement and remains committed to the roadmap. Cox contemplates that U.S. GAAP and IFRS will be available side-by-side. The roadmap has a destination and an estimated time of arrival, according to Cox. It is not dependent on FASB and the IASB resolving all of the differences between their regimes. Once reconciliation is eliminated, the chairman said there should be no roadblock to convergence.

Charlie McCreevy, the European Commissioner for the Internal Market, said that he is very pleased by what the SEC and the European Commission have accomplished. The changeover to IFRS has not been easy, he said, but the feedback is generally positive. The 40 new standards and attendant interpretations have raised a number of issues, but McCreevy said that is how it should be with a principles-based system.

Comm. McCreevy said the CESR/SEC work plan is an important step within the roadmap to ensure the consistent application of IFRS and U.S. GAAP. There is much work to be done, but they are on the right track, he said. In his view, the elimination of the reconciliation requirement will have a positive effect in the U.S. as well as in foreign jurisdictions. He agreed that differences between IFRS and U.S. GAAP should be narrowed but the standards need not be identical.