The heads of the investor protection agencies for the United States and the European Union both said that they expect U.S. GAAP will ultimately be deemed equivalent to the E.U.'s International Financial Reporting Standards.
At a meeting in Washington, U.S. Securities and Exchange Commission Chairman Christopher Cox and EU Internal Market Commissioner Charlie McCreevy took stock of progress on the roadmap laid out last April to eliminating the need for reconciliation between the two countries' accounting methods. The plan was drafted between McCreevy and former SEC Chairman William Donaldson, and aims at reconciliation as soon as 2007, but no later than 2009.
A milestone in the roadmap will be reached in mid-2006, when many foreign issuers begin to file IFRS-based financial statements with the SEC that include a GAAP reconciliation. In the second half of 2006, SEC staff will begin analyzing those financial statements.
McCreevy also mentioned his intention to propose to member states and the European Parliament that a decision on the possible equivalence of GAAP with IFRS should be postponed for two years -- allowing the investor agencies to continue their collaboration.
Cox and McCreevy will meet again later this year to review progress. There will also be regular meetings between SEC and European Commission officials to take stock of developments and monitor progress in moving towards mutually desired goals.
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