SEC proposes international accounting plan
WASHINGTON -- Federal regulators today proposed a plan to allow public companies to begin using international accounting standards for reporting financial results in two years, and may require them to do so starting in 2014.
The push by the Securities and Exchange Commission toward acceptance of a single, global accounting standard has raised objections from some investor advocates and key lawmakers. Supporters of the change say it makes sense in an era of increasingly globalized financial markets and would help lure foreign companies to U.S. markets.
The five SEC commissioners voted unanimously to propose a timetable for the switch to international financial reporting standards, or IFRS, to replace the U.S. standards known as generally accepted accounting principles, or GAAP.
Under the proposal, U.S. companies would have the option of adopting the international standards starting in 2010. The agency then would assess the outcome and decide the following year whether to make it mandatory for all U.S. public companies beginning in 2014 with a completion date of 2016.
The SEC could formally adopt the proposal sometime after a 60-day public comment period.
The agency in November eliminated a rule requiring foreign companies with U.S.-traded shares to report their financial results in line with U.S. accounting standards.
Many foreign public companies comply with the international standards, and some had argued the U.S. mandate was burdensome and costly.
The IFRS system is generally considered more flexible, and giving companies the choice could spell the end of GAAP, experts believe. The international standards are deemed especially desirable for large U.S. companies with foreign subsidiaries, which now must maintain two different sets of books.
Critics of the move toward international standards say investors will lose an important source of information used in making decisions and that it will be harder to compare the results of companies that use different standards.
