[Federal Register Volume 75, Number 159 (Wednesday, August 18, 2010)]
[Notices]
[Pages 51148-51150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20357]
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SECURITIES AND EXCHANGE COMMISSION
[Release Nos. 33-9133; 34-62699; File No. 4-607]
Notice of Solicitation of Public Comment on Consideration of
Incorporating IFRS Into the Financial Reporting System for U.S. Issuers
AGENCY: Securities and Exchange Commission.
ACTION: Request for comment.
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SUMMARY: The Securities and Exchange Commission is requesting public
comment on behalf of the staff on three topics related to its ongoing
consideration of incorporating International Financial Reporting
Standards (``IFRS'') into the financial reporting system for U.S.
issuers. These three topics, derived from the staff's work plan on
consideration of the incorporation of IFRS, involve the impact of such
incorporation on: U.S. investors' current knowledge of IFRS and
preparedness for incorporation of IFRS into the financial reporting
system for U.S. issuers; how investors educate themselves on changes in
accounting standards and the timeliness of such education; and the
extent of, logistics for, and estimated time necessary to undertake
changes to improve investor understanding of IFRS and the related
education process to ensure investors have a sufficient understanding
of IFRS prior to potential incorporation.
DATES: Comments should be received on or before October 18, 2010.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml);
Send an e-mail to [email protected]. Please include
File Number 4-607 on the subject line; or
Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.
[[Page 51149]]
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File No. 4-607. This file number should
be included on the subject line if e-mail is used. To help us process
and review your comments more efficiently, please use only one method.
The Commission will post all comments on the Commission's Internet Web
site (http://www.sec.gov/rules/other.shtml). Comments are also
available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street, NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. All comments
received will be posted without change; we do not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT: Wesley R. Bricker, Professional
Accounting Fellow, or Vassilios Karapanos, Associate Chief Accountant,
Office of the Chief Accountant at (202) 551-5300, or Tamara Brightwell,
Senior Special Counsel, Division of Corporation Finance, at (202) 551-
3500, U.S. Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549.
I. Introduction
On February 24, 2010, the Commission issued a Statement in Support
of Convergence and Global Accounting Standards (the ``Statement''),
reiterating its belief ``that a single set of high-quality globally
accepted accounting standards will benefit U.S. investors and that this
goal is consistent with our mission of protecting investors,
maintaining fair, orderly, and efficient markets, and facilitating
capital formation.'' \1\ In this Statement, the Commission directed its
staff to develop and execute a work plan (``Work Plan''), the purpose
of which is to consider specific areas and factors before potentially
transitioning our current financial reporting system for U.S. issuers
to a system incorporating IFRS.\2\
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\1\ Release Nos. 33-9109; 34-61578 (Feb. 24, 2010) [75 FR 9494]
(Mar. 2, 2010).
\2\ Available at: http://www.sec.gov/spotlight/globalaccountingstandards/globalaccountingstandards.pdf.
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The Work Plan identifies a number of topics for further study,
including the three topics described below that are the subject of this
solicitation for comment.
II. Investors' Current Knowledge of IFRS and Preparedness for
Incorporation of IFRS \3\
A. Background
The consideration of incorporating IFRS into the financial
reporting system for U.S. issuers requires, among other things,
consideration of the impact on investors. This consideration requires
an assessment of investor understanding and education regarding IFRS,
because the main benefits to investors of a single set of high-quality
globally accepted accounting standards would be realized only if
investors understand and have confidence in the basis for the reported
results.
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\3\ See the Work Plan, 75 FR at 9507.
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IFRS currently differs from U.S. GAAP in a number of areas.
Consequently, incorporation of IFRS into the financial reporting system
for U.S. issuers may require significant investor education regarding
IFRS. However, U.S. investors already may possess some understanding of
IFRS due to global industry focus, cross-border investment decisions,
and investments in foreign private issuers. Moreover, through the
convergence process undertaken by the Financial Accounting Standards
Board (``FASB'') and the International Accounting Standards Board
(``IASB''), the differences between the two sets of standards should
become fewer and narrower.
B. Request for Comment
To what extent and in what ways is the set of accounting
standards (such as U.S. GAAP or IFRS) used by a company in its
financial reporting significant to an investor's decision to invest in
that company?
To what extent are investors aware of the potential impact
of incorporation of IFRS into the financial reporting system for U.S.
issuers that they invest in or follow, compared with current U.S. GAAP?
How significant of a change would the use of IFRS as compared to
current U.S. GAAP be for investors?
To what extent and in what ways would any of the current
differences between U.S. GAAP and IFRS affect an investor's use of
information reported in the financial statements? How would completion
of the convergence projects being jointly undertaken by the FASB and
the IASB affect an investor's use of those financial statements?
How do investors develop and maintain an understanding of
the impact of accounting standards, whether IFRS or U.S. GAAP, on the
companies that they currently, or may in the future, invest in? How
confident are investors in their understanding of IFRS? To what extent
and in what ways would that change if IFRS were incorporated into the
financial reporting system for U.S. issuers?
How much time do investors currently devote to
understanding or maintaining an understanding of accounting standards?
To what extent would the time increase or decrease if IFRS were
incorporated into the financial reporting system for U.S. issuers?
If IFRS were to be incorporated into the financial
reporting system for U.S. issuers, to what extent would an investor (or
an investor's organization) have adequate resources to develop an
understanding of IFRS, such as knowledgeable professionals, training
materials, and access to standards?
To what extent and in what ways do investors think
incorporation of IFRS would affect comparability among different
issuers' financial statements? Which standards or treatments in IFRS
that are elective are most important? To what extent do reporting
format and disclosures affect any lack of comparability?
To what extent and in what ways would an investor's
investment decision-making processes change if a U.S. issuer's
financial statements were prepared using IFRS? Would investors need
additional or different information to perform their analysis and, if
so, what?
To what extent and in what ways would an investor's
investment decision-making processes change if U.S. issuers were given
a choice to elect to prepare their financial statements using either
U.S. GAAP or IFRS? Would an investor have greater or lesser confidence
in a company's financial reporting if a U.S. issuer were to elect to
prepare its financial statements in accordance with IFRS rather than
U.S. GAAP?
To what extent would use of IFRS by a U.S. issuer
influence an investor to invest in that issuer? Not to invest? To hold?
To sell?
Do the answers to the questions above change depending on
the nature of the investor (for example, if the investor is a retail
investor, mutual-fund investor, institutional investor, or asset or
portfolio manager) or the class of investments (debt, equity or
convertible securities)?
[[Page 51150]]
III. Investors' Education Processes on Changes in Accounting Standards
and Timeliness of Such Education
A. Background
Incorporation of IFRS into the financial reporting system for U.S.
issuers may affect investors' education processes on changes in
accounting standards and the timeliness of such education. As part of
the Work Plan, the staff is considering how U.S. investors currently
become educated about changes to accounting standards, in order to
better assess the extent of investor educational effort necessary to
effectively incorporate IFRS into the financial reporting system for
U.S. issuers.
B. Request for Comment
In what ways do investors educate themselves about
accounting standards and changes to accounting standards? For example,
do investors review accounting standard setters' project activities and
related board materials? Observe meetings? Review meeting summaries?
Review other observers' commentaries?
At what point do investors educate themselves about
standard-setting activities? Is it during the standard-setting process?
Is it after completion of the standard-setting process? Would the
timing of investors' education processes change if accounting standards
for U.S. issuers were primarily developed by an organization other than
the FASB?
To what extent and in what ways do investors participate
in the standard-setting process when the FASB and IASB set standards?
Do they monitor standard-setting deliberations? Do they prepare
response letters to requests for comment? Do they participate in the
standard setters' working groups and roundtables?
To what extent does the timing of an investor's education
about a possible outcome of the accounting standard-setting process
affect investment decisions? Do investors consider possible changes in
accounting standards when analyzing an issuer's reported financial
information, even before any such change in accounting is required to
be adopted?
Are there ways to improve the representation and
communication of investors' perspectives in connection with accounting
standard setting?
To what extent do investors believe more education or
communication about accounting standards or accounting standard-setting
is needed? If more education or communication is needed, how should the
education or communication be delivered? By whom?
IV. Extent of, Logistics for, and Estimated Time Necessary To Undertake
Any Necessary Changes
A. Background
Incorporating IFRS into the financial reporting system for U.S.
issuers could impact the extent of, logistics for, and estimated time
necessary to undertake changes to improve investor understanding of
IFRS and the related education process to ensure investors have a
sufficient understanding of IFRS prior to potential incorporation.
B. Request for Comment
How much time, if any, do investors need to improve their
understanding of IFRS and related education processes so they have a
sufficient understanding of IFRS prior to any incorporation?
What mechanisms would aid investors in improving their
understanding of IFRS? Who should provide those mechanisms?
Persons submitting comments on any of these questions are invited
to consider and comment on whether the manner in which IFRS
incorporation is implemented would affect the responses to the
questions above.
All interested parties are invited to submit their views, in
writing, on these questions.
Dated: August 12, 2010.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-20357 Filed 8-17-10; 8:45 am]
BILLING CODE 8010-01-P