[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