The Securities and Exchange Commission took a step on Thursday that will move the U.S. and the global accounting industry to a single international accounting standard. According to an Associated Press story in the Seattle Post-Intelligencer, the SEC did away with a requirement under which foreign companies listed on U.S. exchanges had to reconcile their financials with the U.S. generally accepted accounting principles before filing the statements with the commission.
Foreign public companies had argued that the requirement was duplicative and costly given that they already must comply with the International Financial Reporting Standards, but critics of the commission's move say investors will not have adequate information with which to make decisions -- that statements filed under different standards will be too confusing. Sen. Christopher Dodd, D-Conn., and Sen. Jack Reed, D-R.I., say it is "premature" to eliminate the rule now when the move to a single international standard won't be complete until 2011.
The Seattle Post-Intelligencer reports:
SEC Commissioner Kathleen Casey said before the vote [to eliminate the reconciliation requirement] that "only by taking this step will we be able to make progress toward" the goal of a single set of high-quality accounting standards.
In a move that is presumably aimed, in part, to appease those who are concerned that the change will make information gathering burdensome for investors, the commission may require mutual funds to provide investors with a "summary in plain English of key fund information."