SEC Allows International Financial Reporting Standards for Foreign Private Issuers
- United States
- 02/06/2008
The U.S. Securities and Exchange Commission recently issued a release adopting rules under which foreign private issuers may file their financial statements using International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board without including a reconciliation to U.S. generally accepted accounting principles (“U.S. GAAP”).
The new rules apply to: (1) annual financial statements for fiscal years ending after November 15, 2007 (that is, including for calendar year 2007); and (2) interim periods within those years that are contained in filings made after March 4, 2008. In order to omit the U.S. GAAP reconciliation, the notes to the financial statements must state “unreservedly and explicitly” that the financial statements are in compliance with IFRS, and the independent auditor’s report on the financial statements must opine as to such compliance.
Companies filing financial statements using IFRS will not be required to provide the additional information that U.S. GAAP requires to be part of the financial statements (that is, the information called for by Item 18 of Form 20-F). The SEC Release adopting the new rules contains a discussion of how the rules affect various other disclosure items in Form 20-F and certain provisions of Regulation S-X. Special transition rules apply to financial statements in registration statements and certain interim financial statements. All financial statements filed with the SEC will continue to be subject to U.S. auditing standards, including those relating to auditor independence.
The effect of this new rule on regional multinationals will be discussed at Hughes Hubbard’s seminar on “Managing Volatility in Latin America.” To register for this seminar or for more information, click on the banner below, or contact Eduardo Vidal in our New York office.
