Response to the U.S. Securities and Exchange’s Proposed Rule: Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers

41 Pages Posted: 21 Sep 2009

See all articles by Carol Ann Frost

Carol Ann Frost

University of North Texas

Elaine Henry

Stevens Institute of Technology - School of Business

Steve W. J. Lin

Florida International University (FIU) - School of Accounting

Date Written: September 21, 2009

Abstract

This paper is a response to the U.S. Securities and Exchange Commission’s request for comments on its proposed rule concerning a “Roadmap” for the use of financial statements prepared in accordance with International Financial Reporting Standards (IFRS) by U.S. issuers. The paper addresses only a few of the 70 multipart questions contained in the Roadmap. We find that while there are widely divergent opinions, little empirical evidence directly bears on the question of whether U.S. issuers should be required or permitted to adopt IFRS. We conclude that further analysis of the costs and benefits of a mandated transition to IFRS should be done. Notwithstanding the need for further analysis, we question whether it is justified to withhold from U.S. issuers the option to use IFRS for financial reports based on industry membership or size, when all non-U.S. issuers have the option to do so. While IFRS might marginally increase the concentration among audit firms, research suggests that concentration of audit services may be driven primarily by the litigious environment in the U.S. This suggests that concentration would be relatively unaffected by a change in accounting standards.

Keywords: IFRS, SEC Roadmap

JEL Classification: M41, G38

Suggested Citation

Frost, Carol Ann and Henry, Elaine and Lin, Steve W. J., Response to the U.S. Securities and Exchange’s Proposed Rule: Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers (September 21, 2009). Journal of International Accounting Research, 2009. Available at SSRN: https://ssrn.com/abstract=1476534 or http://dx.doi.org/10.2139/ssrn.1476534

Carol Ann Frost

University of North Texas ( email )

1155 Union Circle #305340
Denton, TX 76203
United States
(940) 565- 3069 (Phone)
(940) 565-3803 (Fax)

Elaine Henry

Stevens Institute of Technology - School of Business ( email )

Hoboken, NJ 07030
United States

Steve W. J. Lin (Contact Author)

Florida International University (FIU) - School of Accounting ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

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