The Securities and Exchange Commission’s decision to drop reconciliation requirements for international companies filing financial statements in the United States using International Financial Reporting Standards (IFRS) drew immediate praise from industry groups on Thursday.
The U.S. Chamber of Commerce, which represents more than 3 million businesses around the world, said the SEC’s move would improve the competitiveness of America’s capital markets. The Chamber has been a proponent of a convergence of global accounting standards and has urged U.S. regulators to adopt a more principles-based outlook.
“There must be an acknowledgement in dealing with complex business transactions that different, yet appropriate conclusions may sometimes be reached by different professionals,” Michael Ryan, of the Chamber of Commerce said.
In agreement was the American Institute of Certified Public Accountants. Randy Fletchall, AICPA chairman, and Barry Melancon, the association’s chief executive officer, noted in a comment letter to the SEC that they support a “single set of high-quality, comprehensive accounting standards.”
The AICPA also urged the SEC to gather feedback from U.S. issuers using IFRS to determine what adjustments might be needed. “We believe one common accounting language would benefit investors, as well as issuers and the capital markets, because it would facilitate the comparison of reporting entities domiciled in different countries,” Fletchall and Melancon said.
The SEC’s decision also drew praise from abroad. The International Accounting Standards Board, the overseer of IFRS, said it welcomed the move, calling it an important step towards creating a universal financial reporting language.
“We are delighted that the U.S. Securities and Exchange Commission has decided to allow non-U.S. issuers to file under IFRS without the need for reconciliation to U.S. GAAP,” Sir David Tweedie, the IASB chairman, said.