Response by the Financial Reporting Policy Committee of the Financial Accounting and Reporting Section of the American Accounting Association to the SEC Release: Acceptance from Foreign Private Issuers of Financial Statements Prepared in Accordance with International Financial Reporting Standards Without Reconciliation to U.S. GAAP

38 Pages Posted: 16 Jan 2008  

Patrick E. Hopkins

Indiana University - Kelley School of Business - Department of Accounting

Christine A. Botosan

University of Utah - School of Accounting and Information Systems

Mark T Bradshaw

Boston College

Carolyn M. Callahan

University of Louisville - College of Business

Jack T. Ciesielski Jr.

R.G. Associates

David B. Farber

Indiana University Kelley School of Business Indianapolis

Mark J. Kohlbeck

Florida Atlantic University - School of Accounting

Leslie D. Hodder

Indiana University - Kelley School of Business - Department of Accounting

Bob Laux

Microsoft Corporation

Thomas L. Stober

University of Notre Dame - Department of Accountancy

Phillip C. Stocken

Tuck School of Business at Dartmouth

Teri Lombardi Yohn

Indiana University - Kelley School of Business - Department of Accounting

Date Written: January 1, 2008

Abstract

The Financial Reporting Policy Committee of the Financial Accounting and Reporting Section of the American Accounting Association responded to the SEC's July 13, 2007 proposal to accept financial statements prepared in accordance with International Financial Reporting Standards (IFRS) from foreign-private issuers without reconciliation to U.S. GAAP (the SEC subsequently voted in favor of the proposal on November 15, 2007). Our commentary summarizes and interprets relevant academic research. Our main findings are that material reconciling items exist that are relevant to U.S. investors, there are differences in the implementation of uniform standards and that compliance to IFRS or U.S. GAAP by foreign firms is a concern, foreign firms benefit from greater access to capital by listing in the U.S. and the U.S. requirements do not make the U.S. market less attractive to foreign firms, U.S. investors tend to prefer U.S. GAAP suggesting that elimination of the reconciliation may discourage U.S. investment in foreign firms, and that U.S. GAAP - IFRS harmonization might improve the functioning of the U.S. capital markets. We conclude that eliminating the reconciliation requirement was premature.

Keywords: International Accounting, US GAAP Reconciliation, Foreign Private Issuers

JEL Classification: M41, M44, M47, G38

Suggested Citation

Hopkins, Patrick E. and Botosan, Christine A. and Bradshaw, Mark T and Callahan, Carolyn M. and Ciesielski, Jack T. and Farber, David B. and Kohlbeck, Mark J. and Hodder, Leslie D. and Laux, Bob and Stober, Thomas L. and Stocken, Phillip C. and Yohn, Teri Lombardi, Response by the Financial Reporting Policy Committee of the Financial Accounting and Reporting Section of the American Accounting Association to the SEC Release: Acceptance from Foreign Private Issuers of Financial Statements Prepared in Accordance with International Financial Reporting Standards Without Reconciliation to U.S. GAAP (January 1, 2008). Available at SSRN: https://ssrn.com/abstract=1083679 or http://dx.doi.org/10.2139/ssrn.1083679

Patrick E. Hopkins

Indiana University - Kelley School of Business - Department of Accounting ( email )

Kelley School of Business
1309 E. 10th Street
Bloomington, IN 47405
United States
812-855 2617 (Phone)
812-855 8679 (Fax)

Christine A. Botosan (Contact Author)

University of Utah - School of Accounting and Information Systems ( email )

1655 Campus Center Drive
Salt Lake City, UT 84112
United States
801-581-8695 (Phone)
801-581-7214 (Fax)

Mark T Bradshaw

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Carolyn M. Callahan

University of Louisville - College of Business ( email )

Dean's Office
Louisville, KY 40292
United States
(502) 852-6443 (Phone)
(502) 852-7557 (Fax)

Jack T. Ciesielski Jr.

R.G. Associates ( email )

United States

David B. Farber

Indiana University Kelley School of Business Indianapolis ( email )

801 W Michigan Ave
Indianapolis, IN 46202
United States

Mark J. Kohlbeck

Florida Atlantic University - School of Accounting ( email )

777 Glades Avenue
KH 119
Boca Raton, FL 33431-0991
United States
561-297-1363 (Phone)

Leslie D. Davis Hodder

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

Bob Laux

Microsoft Corporation ( email )

One Microsoft Way
Redmond, WA 98052
United States

Thomas L. Stober

University of Notre Dame - Department of Accountancy ( email )

Notre Dame, IN 46556-0399
United States
219-631-7614 (Phone)

Phillip C. Stocken

Tuck School of Business at Dartmouth ( email )

Hanover, NH 03755
United States
603-646-2843 (Phone)

Teri Lombardi Yohn

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States
(812) 855-0430 (Phone)

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