The International Accounting Standards Board (IASB) has welcomed the decision taken today by the US Securities and Exchange Commission (SEC) to remove the requirement for non-US companies reporting under International Financial Reporting Standards (IFRS) as issued by the IASB to reconcile their financial statements to US generally accepted accounting principles (GAAP). The development of a single, high quality language for financial reporting that is accepted throughout the world’s capital markets has been the primary goal of the IASB since its inception in 2001 and the SEC decision has been heralded as an important step towards achieving that objective. The adoption of IFRS by the European Union with effect from 2005, and similar decisions by Australia, Hong Kong and South Africa, led the way in a process that has resulted in over 100 countries now requiring or permitting the use of IFRS. The SEC’s decision follows those announced by other countries in 2007 to establish time lines for the acceptance of IFRS in their domestic markets or accelerate convergence of national standards with IFRS. Among those are Canada, India and Korea, all of which will adopt IFRS by 2011. In Brazil listed companies will have to comply with IFRS from 2010, and convergence between Japanese GAAP and IFRS is expected by 2011. At the beginning of this year, China introduced a completely new set of accounting standards that are intended to produce the same results as IFRS. Commenting on the SEC’s decision, Sir David Tweedie, chairman of the IASB, said: “We are delighted that the SEC has decided to allow non-US issuers to file under IFRS without the need for reconciliation to US GAAP. The IASB remains strongly committed to its joint work with the US Financial Accounting Standards Board set out in the Memorandum of Understanding in February 2006 in order to achieve our goal of providing the world’s integrating capital markets with a common language for financial reporting.”
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