The Securities and Exchange Commission voted today to approve a road map for the use of International Financial Reporting Standards by U.S. companies allowing the possibility for some corporations to adopt the standard on an optional basis starting as early as the end of 2009.
A mandatory adoption could take place at the end of 2013, the SEC said in a meeting Wednesday morning.
About 110 of the largest U.S. companies by market capitalization, in 34 industries, would be eligible to adopt the IFRS standards on an optional basis at the end of 2009 for filings starting in 2010.
In 2011, the SEC would evaluate different benefits and costs of early adoption and make a decision whether to approve a mandatory requirement for companies to adopt IFRS.
John White, director of the division of corporate finance at the SEC said the mandatory requirement could start in 2013 for filings in 2014, but that the SEC will decide on a specific date in 2011.
He said there may be a staged rollout of the new standard that could include more companies than the initial 110 expected to become early adopters.
“The largest companies are the best equipped to move to IFRS,” said Conrad Hewitt, chief accountant at the SEC, speaking of early adopters.
At least 110 companies representing about $2.5 trillion in market capitalization are expected to be eligible to be early adopters.
For early adopters, there are two alternative proposals for reconciling statements. Companies would either need to provide one year of audits that reconcile financial information between IFRS and U.S. general accepted accounting principles, or three years of reconciling information that has not been audited.
There will be a comment period of 60 days on the alternatives for reconciliation.
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