EY IFRSComments

1 securities and exchange commission speech by sec

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Unformatted text preview: nd we will provide updates as new developments occur. ✔ 1 Securities and Exchange Commission, Speech by SEC Chairman: Remarks on Acceptance of the Atlantic Leadership Award from the European-American Business Council, 1 February 2008. 2 BoardMatters Quarterly April 2008 IFRS: what it means to issuers As IFRS becomes the dominant accounting framework outside of the US, adopting IFRS as a common basis for statutory reporting, where permitted, could provide long-term efficiencies within a company’s finance organization. Recent activities indicate that we are headed toward worldwide acceptance of a single set of highquality global accounting standards. The US Securities and Exchange Commission’s (SEC) decision in November 2007 to permit foreign private issuers the option of filing their financial statements prepared in accordance with International Financial Reporting Standards (IFRS) without reconciliation to US GAAP increased the likelihood that the option to use IFRS would be made available for US filers. Many companies are currently taking a “wait-and-see” approach and will react when the SEC makes IFRS optional or mandatory. Others, particularly large multinationals and those that want to be in front of such a move, are transitioning from awareness to action and are already evaluating exactly how a conversion to IFRS might affect their organizations. Considerations As US GAAP evolved, so did companies’ processes and data collection activities. Adopting IFRS gives companies an opportunity to take a clean look at these processes and possibly simplify them. Efficiency and effectiveness With close to 100 countries already requiring or permitting the use of IFRS, companies may see longterm improvements to efficiency and effectiveness through the standardization of practices across countries and the elimination of duplicative reporting practices. The foreign operations of US multinationals generally must file local statutory reports in the countries in which they operate. Many countries that may have previously required the use of local country GAAP are increasingly requiring or allowing local statutory reporting to be done in accordance with IFRS. As IFRS becomes the dominant accounting framework outside of the US, adopting IFRS as a common basis for statutory reporting, where permitted, could provide longterm efficiencies within a company’s finance organization. To realize these benefits, companies should assess which of their foreign locations are permitted to report in accordance with IFRS for local statutory purposes and consider changing to IFRS if they have not already done so. Even if a US multinational is never required to convert to IFRS for its consolidated accounts, using IFRS — instead of local country accounting standards — for statutory reporting may improve efficiency by eliminating the need to support multiple accounting bases. Consolidating subsidiaries under one consistent accounting platform should result in cost reductions and strengthen...
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This note was uploaded on 11/21/2009 for the course ACC acc 310 taught by Professor Mlot during the Fall '09 term at N.C. State.

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