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May 25, 2011

SEC examines IFRS adoption

The Securities and Exchange Commission (SEC) is investigating the adoption of IFRS in the US, and will publish three papers to outline its findings.

SEC staff are currently working on papers for public study and comment to examine a possible framework for incorporating IFRS into US financial reporting, said Shelly Luisi, senior association chief accountant at the SEC

The SEC is also developing a comparison of US and international accounting rules, and a review of financial statements prepared under IFRS.

Staff members are also working on an updated, detailed study of where there are still differences between US GAAP and IFRS, to “determine whether IFRS standards are of adequate quality to meet US financial reporting needs”, Luisi said

The final part of the study includes a detailed analysis of IFRS filings to determine the quality of accounting produced under IFRS, according to Luisi.

This part of the study focuses on the comparability of companies that report under IFRS, and seeks to determine what kind of choices companies are making when IFRS gives them alternatives.

The first paper will include a possible framework or time line for eventually adopting IFRS in the US, dividing adoption into three major phases that would occur over five to seven years, Luisi said.

The SEC is expected to continue to monitor the convergence effort to eliminate major differences in accounting standards, then endorse or adopt international standards individually as the SEC deems them ready for use in the country, Luisi said.

 

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