SEC to be just as tough on international reports-official
By Emily Chasan
NEW YORK, April 30 (Reuters) - Regulators at the U.S. Securities and Exchange Commission will be just as tough when examining financial statements filed under international accounting rules, a top official said on Wednesday.
"Unequivocally, we will review financial statements prepared under IFRS (International Financial Reporting Standards)," said Wayne Carnall, deputy chief accountant in the SEC's division of corporation finance.
"We will comment on financial statements, we will challenge the accounting under IFRS and if the financial statements are wrong and do not comply with IFRS we will require those companies to restate," he added.
This year, U.S. regulators began allowing foreign companies that list their shares in the United States to file financial statements under IFRS rather than forcing them to reconcile to U.S. Generally Accepted Accounting Principles (GAAP) as was done in the past.
If the SEC did ask a European company to restate results, Carnall said it has set up procedures to consult with the Committee of European Securities Regulators (CESR).
"There have been a limited number of situations where we have consulted with (the CESR), and we will certainly do so in the future," Carnall said in comments to a Practising Law Institute conference in New York.
He added that it was possible the two regulatory bodies could, at times, disagree.
"They might accept the accounting and we may believe it is wrong, and the way the protocols are set up we could each have different answers."
While Carnall said he expects such situations to be rare, such consultation could lay groundwork for regulators to cooperate further if U.S. companies begin to use IFRS for their own financial statements.
The SEC is considering whether U.S. companies could file reports under the international standards and how U.S. accounting standards might be converged with international ones.
Some U.S. executives have complained that allowing foreign filers to use IFRS creates an unfair advantage for foreign companies. Other companies have so many subsidiaries overseas that they feel using international accounting rules would simplify their accounting.
But if U.S. companies are eventually allowed to file under international rules, Carnall said they should expect the SEC to make its own decisions about whether U.S. companies are following the rules.
"We will certainly be interested in what the rest of the world has to say but we will not be deferring to other regulators," Carnall said. (Editing by Brian Moss)
