The U.S. Securities and Exchange Commission announced a series of actions it intends to take relating to the acceptance of financial reporting in International Financial Reporting Standards.

The commission anticipates issuing a release this summer that will request comments on proposed changes to its rules which would allow the use of IFRS in financial reports filed by foreign private issuers that are registered with the commission. The approach in the proposed rule would be to give foreign private issuers a choice between IFRS and U.S. GAAP. In addition, the commission plans a concept release relating to issues surrounding the possibility of treating U.S. and foreign issuers similarly in this respect by also providing U.S. issuers the alternative to use IFRS. Comments on both would be due in the fall.

“The next steps that the commission is announcing today will keep us on course with the roadmap announced in 2005,” said SEC chairman Christopher Cox. Pending public comments on the proposal, “we remain on track to eliminate reconciliation by 2009,” Cox added.

The SEC’s rules currently require that foreign private issuers who report in IFRS, or any other non-U.S. GAAP, provide a reconciliation of those financial statements to U.S. GAAP. The planned proposal would eliminate that reconciliation requirement with respect to financial statements filed in IFRS beginning in 2009.

Because the elimination of the reconciliation requirement will permit some, but not all, registrants to have a choice between IFRS and U.S. GAAP, it raises the question whether all registrants should be able to report under either IFRS or U.S. GAAP.

“I am very pleased that the commission is moving forward in this important area. The actions announced today represent critical steps toward a future regulatory framework in which IFRS may be used on a stand-alone basis by foreign private issuers and possibly also by U.S. issuers,” remarked John White, director of the SEC’s Division of Corporation Finance. “The staff will continue our work relating to IFRS so that we are in a position to make a recommendation to the commission with respect to the elimination of the U.S. GAAP reconciliation requirement in time for the annual reports filed by calendar year foreign private issuers in 2009.”

Also, the SEC signed a protocol with the UK’s Financial Services Authority, and the UK’s Financial Reporting Council for implementing the work plan between the SEC and the Committee of European Securities Regulators to share information on application of IFRS by issuers listed in the UK and the U.S.

At separate meetings with the FSA and FRC in London, SEC chairman Cox executed the protocol with UK FSA chairman Callum McCarthy and UK FRC chief executive Paul Boyle to facilitate implementation of the SEC-CESR work plan. The information to be shared concerns the application of IFRS in the financial statements of issuers listed in the UK and registered with the SEC.

The SEC said that the world’s capital markets stand to benefit significantly from widespread acceptance and use of global accounting standards that are high-quality, comprehensive, and rigorously applied. Cox said, “This agreement provides the framework for the confidential exchange of information between the SEC staff and the staff of the FRC, which is charged with reviewing issuers’ published financial statements in the UK. High-quality and consistent application of IFRS is critical to the future of global accounting standards. Sharing information under this protocol should help to promote this goal.”

FRC CEO Boyle said, “This agreement is an important building-block in improving the FRC’s effectiveness in promoting confidence in corporate reporting in the UK. Our ability to work more closely with the SEC is in the interests of users and preparers of financial statements of companies listed in both the UK and the USA.”