Officials from the Securities and Exchange Commission and the European Union Commission have reached an agreement on a "roadmap" toward equivalence between international and U.S. accounting rules.
The roadmap sets out steps the SEC will take to eliminate the need for European companies using International Financial Reporting Standards to reconcile to U.S. GAAP standards possibly as soon as 2007, but no later than 2009, EU Internal Market Commissioner Charlie McCreevy said Friday. Currently, European companies doing business in the U.S. have to conform to GAAP rules, which means keeping two sets of books.
The accord moves forward an ongoing convergence project undertaken by accounting standard-setters on both sides of the globe. Members of the Financial Accounting Standards Board and their overseas counterpart, the International Accounting Standards Board, have been working on hashing out the differences in their standards for years.
"Clearly there is much to do all round, but the bandwagon has now started," McCreevy said of the accord. "I will be pressing all concerned in Europe to play their part."
SEC Chairman William Donaldson cautioned that the ultimate success of IFRS "will depend on many parties, including companies, auditors, standard-setters and regulators," but added that he is "glad that all parties are taking on the challenge."
McCreevy said that he will meet with Donaldson next year to review the progress of the plan.
Donaldson said that the officials also discussed ongoing work by the SEC staff to examine the issue of deregistration by foreign private issuers, and said that he expects the commission to consider a rule proposal before the end of the year.
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