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Globally Accepted Accounting Standards on the Way?

The Securities and Exchange Commission recently issued a statement that lays out its position regarding global accounting standards and makes clear that the Commission continues to believe that a single set of high-quality globally accepted accounting standards would benefit U S investors !s a step toward achieving the goal of a single set of high-quality global accounting standards" the statement notes that the Commission continues to encourage the convergence of U S #enerally !ccepted !ccounting $rinciples %U S #!!$& and 'nternational (inancial )eporting Standards %'()S& in order to narrow the differences between the two sets of standards *(or nearly +, years" the Commission has promoted a single set of high-quality globally accepted accounting standards" which would advance the dual goals of improving financial reporting within the U S and reducing country-by-country disparities in financial reporting"* said SEC Chairman -ary . Schapiro */ut supporting this goal is only the beginning of the discussion" not the end * The Commission0s staff is commencing on a 1ork $lan" the results of which will aid the Commission in its evaluation of the impact that the use of '()S by U S companies would have on the U S securities market 'ncluded in this 1ork $lan will be consideration of '()S" as it exists today and after the completion of various *convergence pro2ects* currently underway between U S and international accounting standards-setters /y 3,44" assuming completion of these convergence pro2ects and the staff5s 1ork $lan" the Commission will decide whether to incorporate '()S into the U S financial reporting system" and if so" when and how 'n 6ovember 3,,7" the Commission proposed a series of milestones %also known as the $roposed )oadmap& that would guide the Commission in determining whether to transition U S capital markets to '()S !fter proposing the )oadmap" the Commission received more than 3,, comment letters from a wide variety of market participants" including investors" regulators" issuers" accountants" attorneys" academia" standards setters" and international organi8ations Commenters expressed widespread support for the goal of having a single set of high-quality globally accepted accounting standards" but differed in their views about the approach in the $roposed )oadmap Therefore" the Commission5s statement indicates that it is important to carefully consider and deliberate whether such a change is in the best interest of U S investors and markets !mong other things" the staff5s 1ork $lan will address many of the issues highlighted by commenters" including9 :etermining whether '()S is sufficiently developed and consistent in application for use as the single set of accounting standards in the U S reporting system

Ensuring that accounting standards are set by an independent standard-setter and for the benefit of investors. Investor understanding and education regarding IFRS, and how it differs from U.S. G !. Understanding whether U.S. "aws or regu"ations, outside of the securities "aws, for e#amp"e ta# "aws and regu"atory reporting, wou"d be affected by a change in accounting standards. Understanding the impact on companies, both "arge and sma"", inc"uding changes to accounting systems, changes to contractua" arrangements, corporate governance considerations and "itigation contingencies. $etermining whether the peop"e who prepare and audit financia" statements are sufficient"y prepared, through education and e#perience, to ma%e the conversion to IFRS.

The SEC staff will provide public progress reports on the 1ork $lan" as well as the status of the (!S/ and '!S/ convergence pro2ects" beginning no later than ;ctober 3,4, and frequently thereafter until the work is complete Commenters on the $roposed )oadmap also expressed a view that U S companies would need approximately a four- to five-year timeframe to successfully implement a change in their financial reporting systems to incorporate '()S Therefore" if the Commission determines in 3,44 to incorporate '()S into the U S financial reporting system" the first time that U S companies would report under such a system would be no earlier than 3,4< The 1ork $lan would further evaluate this timeline