The commissioners erase the requirement that non-U.S. companies must reconcile with GAAP financials filed under non-U.S. standards.
Some non-U.S. companies no longer must reconcile their financials with U.S. GAAP, as long as they use International Financial Reporting Standards.
The Securities and Exchange Commission voted unanimously on Thursday to eliminate the reconciliation requirement immediately. Those eligible foreign private issuers that have yet to file their financials for the 2007 fiscal year don't have to create a reconciliation report. The original SEC proposal, raised earlier this year, would have gone into effect in 2009.
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Commissioner Annette Nazareth hopes that the dual reporting system that the SEC's vote creates in the United States is temporary. The ultimate goal is one set of global accounting rules that can be used worldwide, she said.
The SEC's decision is a first step in a process that could later give all U.S. public issuer the choice between filing their financials in GAAP or IFRS, commission officials have said. In fact, critics of the SEC's vote worry that it could hinder future progress in the ongoing convergence project between the Financial Accounting Standards Board and the International Accounting Standards Board. Instead of contributing to the goal of a single set of high-quality standards, offering all U.S. companies a choice between GAAP and IFRS before a significant number of IFRS flaws are corrected, could lead to a uniform set of standards — but a low-quality one.
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