IFRS Resource Center at Grant Thornton LLP
International Financial Reporting Standards (IFRS) are increasingly being viewed as the single set of high-quality accounting standards for global capital market participants. In late 2007, the Securities and Exchange Commission (SEC) adopted rules to accept SEC filings from foreign private issuers without requiring reconciliation to U.S. GAAP, provided their financial statements were prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB). The rules are applicable to financial statements for financial years ending after Nov. 15, 2007 and interim periods within those years. The new rules became effective on March 4, 2008.
Foreign companies that either use their own country’s GAAP or IFRS other than that issued by the IASB (which is sometimes referred to as “pure” IFRS) are still required to reconcile their financial statements to U.S. GAAP when filing with the SEC. However, the new rules contain a temporary transition accommodation for existing European Union (“EU”) registrants that use IFRS as adopted by the EU for the first two financial years that end after Nov. 15, 2007, if those financial statements otherwise comply with and contain a reconciliation to pure IFRS. The difference between pure IFRS and IFRS as adopted by the EU is in the way the hedge accounting rules operate.
In August 2007, in a move that demonstrated the increasing importance of IFRS, the SEC issued a Concept Release on allowing U.S. issuers to prepare financial statements in accordance with IFRS. Public roundtable discussion and comment letters on the Concept Release, as well as the message heard from speakers at the December 2007 AICPA National Conference on current SEC and PCAOB Developments, point to overwhelming agreement that the U.S. capital markets should move to IFRS. Many believe that within three to five years the U.S. capital markets will have made the changeover.
Today over one hundred countries have already transitioned to IFRS. It is still too early to tell whether non-profits, private companies and governmental entities will eventually adopt IFRS. However, it is clear that IFRS will play an increasing role in the global business community.
Access the online Grant Thornton IFRS Resource Center
Want to hear more? Download The Current State of IFRS
Want to hear more? Download Comparison between U.S. GAAP and International Financial Reporting Standards
